What it is:
How it works/Example:
Stock rights are instruments that companies give to shareholders. They allow shareholders to buy more of the company, usually within one or two months and for below the current market price. This helps the shareholder maintain his ownership percentage in the company if the company additional shares.
Stock rights are "attached" to the shares that companies , but some rights are detachable. In either case, rights expire.
Let's say Company XYZ shares have rights attached. If the rights detach on a certain day or expire, we say that the stock is trading "ex-rights" and the ticker shows an XRT extension, like this: XYZ.XRT.
Why it matters:
that have just gone ex-rights often trade lower. Also, the buyer of a that has just gone ex-rights obviously doesn't have any rights with which to ensure that his or her ownership percentage stays the same.
Many companies have several different types of securities listed. Extensions help investors understand which securities are which.