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24 Cards in this Set

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Fixed Rate of Return
Normally has an annual dividend stated by a percentage of it's par value (assume $100)
A preferred stock's par value is more meaningful than common stock, because common stock par value is less important than book value and market value
This equity's prices tend to fluctuate with interest rates rather than the company's outlook unless a company's credit is diminished
Preferred stock
Preferred stock is non-voting
Adjustable rate preferred
Stocks are issued with variable or adjustable dividend rates that follow some other interest rate benchmark. Can be adjusted semi annually
Ex: Treasury Bill and money market rates
Reset Date
Date of dividend adjustment for a preferred stock
Adjustable rate stock that is
Scheduled Redemption date/Set Date for Preferred stock?
None, because it is not a bond so it does not mature
Preset date is when a bond matures
Straight Preferred
Noncumulative, nothing beyond a fixed dividend
Missed dividends arent paid
Cumulative Preferred
Missed dividends get paid to owners when dividend announced by BOD
annual dividend times numbers of years missed
Convertible Preferred
Stock can be converted to common stock at a preset amount.
Typically issued at a lower dividend since may convert and earn capital gains
Exercising an option of this type of stock increases the total number of common stock outstanding
Convertible preferred
As a result, leads to decrease in earnings per common share and may decrease market value (flooding)
Participating Preferred
Earn a share of corporate profits after dividends/interest due has been paid
Percentage at which the stock participates is noted on certificate ex. described as IMB 6% preferred participating to 9%, meaning owners can receive up to 3% more if decided
Callable
redeemable, can be bought
Callable Preferred
Company can buy back from investors at stated price after a specified date
Benefit: can replace a high fixed dividend with a lower one. Company usually pays a premium to the par value for the privilege when redeem. Ex: Paying $130 for a share with a $100 par value
Which has a higher stated rate- Straight or Cumulative
Straight, because Cumulative doesn't risk missing a dividend
This preferred stock will have the highest stated dividend, all other factors being equal
Callable, because company is paying for risk that stock will be redeemed
Stock Power
Document that is signed in order to transfer ownership of stock
Transfer Agent
Manages securities ownership. Issues, cancels, maintains records for stock ownership.
Cannot be the same person or department as the registrar
Stock split causes which two measurements change
Par value and market value
2:1 stock split results in double outstanding shares and each stock's par value is halved. Two nickels instead of a dime
Registrar
Responsible for accounting for all of an issuers outstanding stock
A state entity
Ex-dividend
Selling without rights to dividend payments. Seller receives the dividend, not buyers
Ex dividend date- point at which stock's dividend does not transfer in a trade. Two business days before record date. Customer must buy stock 3 days before record date, since trades settle T+3 typically
Dividend Record Date
Owners of a stock this day receive the dividend
Dividend Payable date
3 or 4 weeks after the record date
Sent by the dividend disbursing agent
Cash Trades
Cash trades settle the same day, so they go in ex-dividend on the day after the record date
No lag occurs as a result of no settlement period
DERP
Order of dates in dividend distributions
Declaration, EX, Record, Payable
Special handling of a stock distribution at or above this number
25% of a stock distribution