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Equity securities represent claims on a company's which alfect their risk and return characteristics in different ways. In addition to common shares falso ionewn as ordinary shares or on a company's net assets Bcomparies may also issue preferenceshares falso knewn as 1. Common shares and preference shares are both tvpes of Variations in the features of equity securities are refected in their +30 it is important to understand the valuation implications of these features. The characteristics of an entire portfolio in the decision on how much of a client's portfolio to to equities. When a company issues equity securities, it is to make geriodic byments to shareholders for the use of their funds, and it is not contractually obligated to the amount it receives from shareholders, Investors who purchase equity securities are seeking total return fie. price appreciation and/or dividend incomel, and expect the compary's manazement to act in their best interest by making operating decisions that will shareholder wealth. Analysts may examine the relationship between equity market capitalization and GDP as a rough indicator of whether a specific countrys er reelomis equity marketi is undervalued, overvalued, or fairly valued, particularly compared to its long-tun average. Following the stock wharket furmol in 200s, the market capitalizatian to GDP ratioe the United States fell to , which is significantly lower than its longrun average of While US equity markets conthitute around total capitalization of global equity markets, their contribution to the global GDP is only around These shaw the of US equity markets relsive to their