A ticker symbol is a shortcode to identify a particular stock or security. The code is short in order to help investors or traders easily identify different stocks.
Knowing an institutions ticker symbol is essential to quickly access any financial and investment-related information about the institutions.
How does it work?
Every time you type the ticker symbol of an institution in the search engine or your brokerage websites you can access a lot of investment-related information.
That information range from their dividend history, stock chart, stock split history, daily volume, to their price-to-earnings ratio.
For instance, you want to find information about The Coca-Cola Company, then you just need to input its symbol, “KO”, in the search engine or your brokerage website.
Some companies usually choose ticker symbols that suggest their full names, such as Microsoft (MSFT), Amazon (AMZN), and eBay (EBAY). While some others use the symbol to communicate their brand and marketing purpose.
The example of that company is Harley Davidson (HOG) and the Global Wind Energy ETF (FAN).
Companies with multiple ticker symbols
If you find a company with multiple ticker symbols, you do not need to get confused. They are usually companies with multiple ticker symbols in multiple classes of stock outstanding.
Their class is most often in a dual-class setup, so they can have interesting capital structure.
For instance, the spice giant McCormick & Company. Its ticker symbols are “MKC” and “MKC/V”. People held shares trading under “MKC” symbol have no voting right, but they receive the higher dividend. Meanwhile, people held shares trading under the “MKC/V” symbol have voting rights, but receive a lower dividend per share.
Knowing an institution’s ticker symbol is essential when you want to buy or sell shares. Coming to the wrong ticker symbol while trading will result in getting the wrong asset. That can be costly.
Also read: How Do Stocks and Stock Market Work?
In addition, you can sometimes tell which exchange or market a stock trades on based on the number of letters in its ticker symbol. Generally, stocks with four or more letters trade on the NASDAQ.
Besides, a ticker symbol with an “E” or “LF” after its name usually has not met the Security and Exchange Commission’s financial reporting conditions.
