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26 Cards in this Set

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Preferred Stock
it has no fixed maturity date, does not bring on bankruptcy, divedends are not deductible for tax purposes
Cumlative Feature
a requirement that all past, unpaid preffered stock dividends be paid before any stock dividends declared
Protective Provisions
protect the investors interest, voting in event of nonpayment of common stock dividends, or restrict the payment of common stock dividends
Convertible Preferred Stock
preferred shares that can be converted into a predetermined number of shares of common stock, if investors so choose
Call Provision
a provision that entitles the corporation to repurchase its preferred stock from investors at stated prices over specified periods
Sinking Fund Provision
a protective provision that requires the firm periodically to set aside an amount of money for the retirement of its preferred stock.
Common Stock
shares that represent the ownership in a corporation
Limited Liability
a protective provision whereby the investor is not liable for more than the amount he or she has invested in the firm
Proxy
a means of voting in which a desingated party is provided with the temporary power of attorney to vote for the signee at corporations annual meeting
Proxy fight
a battle between rival groups for proxy votes in order to control the decisions made in a stockholders meeting
Majority Voting
voting in which each share of stock allows the sharholder one vote, and each position on the board of directors is voted on separately
Cumulative Voting
voting in which each share of stock allows the shareholder a number of votes equal to the number of directors being elected. Can select one or many candidates
Preemptive Right
the right entitiling the common stockholder to maintain his or her proportionate share of ownership in the firm
Right
a certificate issued to common stockholders giving them an option to purchase a stated number of new shares at a specified price during a 2 to 10 week period
Internal growth
a firms growth rate resulting from reinvesting the companys profits rather than distributing them as dividends
Profit retention rate
the companys percentage of profits retained
Dividend payout ratio
divdends as a percentage of earnings
Expected rate of return
the rate of return that investors expect to receive on an investment by paying the current market price of the security
How is preferred stock different from common stock?
1. no fixed maturity date
2. fails to pay dividends does not bring bankruptcy
3. dividends are not deductible for tax purposes
What is multiple series stock?
More than one series of stock
What are claim on assets or income on preferred stock?
Has higher priority on claims of assets and income
What are claims on income for common stock?
Have the right to residual income after creditors and preferred stockholders
-common shareholders might not gain any dividends from there investements if it is eaten up by preferred stock holders and creditor
-same goes with claims on assets
What is limited liability?
- the amount of money that investors will lose in bankruptcy is only the amount that they invested
What are voting rights with common stocks?
can elect a board of directors
-change in the coroporate charter
-majority vote in proxy
What is a common problem with voting in directors?
-managers have there say in which directors to vote in
How is the dividend different for a common stock to a bond?
Dividends rely on the profitability of the firm