Acc 325 - Chapter 5

Front 1

2 types of basic types of brokerage markets:

Back 1

1. securities
2. commodities

Front 2

Securities market
(df)

Back 2

Involves buying and sellings stocks and bonds

Front 3

Commodities market
(df)

Back 3

Involves buying and selling produced goods
ex. grain, livestock, gold or timber

Front 4

Stock basics
(3)

Back 4

1. people who own stock own part of the corporation issuing the stock
2. a person's ownership is represented by the number of shares he owns
3. the shares are a claim in the corp's assets and earnings

Front 5

Bond basics

Back 5

1. a bond is any interest bearing or discounted Government or corporate security that obligates the issuer to pay the bondholder a specified sum of money, usually at specific intervals, and to repay the amount of the loan on maturity

Front 6

2 classes of capital stock:

Back 6

1. common stock
2. preferred stock

Front 7

Common stock
(2)

Back 7

1. receives dividends second
2. has voting rights

Front 8

Preferred stock
(2)

Back 8

1. receives dividends first
2. no voting rights

Front 9

Treasury stock
(2)

Back 9

1. shares issued and subsequently reacquired by the corp through purchase or donation
2. number of shares outstanding = number of shares issued - number of shares of treasury stock

Front 10

Dividends

Back 10

1. a corp may pay a dividend in cash, stock, or property

Front 11

Bonds
(3)

Back 11

1. usually for $1000
2. evidence of a loan from the bondholder to the corporation or governmental unit
3. bondholders do not have corporate ownership privileges

Front 12

Types of bonds
(3)

Back 12

1. corporate
2. municipal
3. u.s. government obligations

Front 13

Corporate bonds

Back 13

1. issued by private corps
ex. railroads, public utilities, etc

Front 14

Municipal bonds
(2)

Back 14

1. obligation of a state, county, municipality, or any agency thereof
2. interest accrued is free from federal taxes

Front 15

US government obligations includes:
(3)

Back 15

1. treasury bills
2. treasury notes
3. treasury bonds

Front 16

Treasury bills
(4)

Back 16

1. short term securities that mature in one year or less
2. do not pay a fixed rate of interest
3. issued and traded at a discount
4. minimum issued = $10,000

Front 17

Treasury notes
(4)

Back 17

1. intermediate securities that mature in one to ten years
2. carry a fixed interest rate
3. issued and traded at face value
4. issued $1,000 to 1 mill

Front 18

Treasury bonds
(4)

Back 18

1. long term bonds with maturities of 10 years or longer
2. carry fixed interest rate
3. issued and traded at a percentage of their face value
4. minimum issued = $1,000

Front 19

2 major stock exchanges:

Back 19

1. New York Stock Exchange
2. American Stock Exchange

Front 20

Security on NYSE and AMEX

Back 20

No security is listed on both the NYSE and AMEX

Front 21

Over the counter market
(2)

Back 21

1. handles most of the securities transactions that take place in the US
2. handles all of the securities transactions that are NOT listed on the securities exchanges

Front 22

2 ways securities are held (owned):

Back 22

1. in the name of the account holder
2. in street name

Front 23

In the name of the account holder

Back 23

The securities owned simply reflect the name of the customer who maintains the account

Front 24

In street name

Back 24

When securities are held in a street name, they are registered in the name of the broker

Front 25

In the commodities market, the basic instrument of exchange is called

Back 25

the futures contract

Front 26

Futures contract

Back 26

A legally binding commitment to make delivery (sell) or take delivery (buy) of a given quantity and quality of a commodity at a contracted price and date

Front 27

2 major commodities exchanges

Back 27

1. Chicago board of trade
2. Chicago mercantile exchange

Front 28

Broker

Back 28

1. an agent who handles the public's orders to buy and sell securities and commodities, usually for a commission