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25 Cards in this Set
- Front
- Back
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Call option
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A claim that gives the holder the right, but not the obligation, to buy shares at a particular price (the exercise price). 266
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Clean-surplus accounting
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Produces a statement of shareholders' equity that contains only net income (closed from the income statement) and transactions with shareholders. 262
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Contingent equity claim
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A claim that may be converted into common equity if conditions are met. Examples are call options, put options, and convertible securities. 270
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Convertible securities
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Securities (such as bonds and preferred stock) that can be converted into common shares if conditions are met, but which have additional claims also. 272
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Dilution (to existing shareholders)
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Occurs when shares are issued to new shareholders at less than market value. 267
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Dirty-surplus item
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An accounting item in shareholder's equity other than transactions with shareholders or income closed from the income statement. 262
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Forward share purchase agreement
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An agreement to buy back shares at a specified price in the future. 271
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Hidden dirty-surplus expense
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An expense that arises from the issue of shares but is not recognized in the financial statements. 267
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Incentive options
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Employee stock options that are not taxed to the employee on exercise and are not tax deductible for the issuing firm. 267
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Nonqualifying options
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Employee stock options that are taxable o the employee on exercise and tax deductible to the issuing corporation. 267
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Option overhang
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The value of stock options unexercised. 269
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Payout
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Amounts paid to shareholders. The term is sometimes used to refer only to dividends, sometimes to dividends and stock repurchases. Compare with retention. 265
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Put option
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A claim that gives the holder the right, but not the obligation, to sell shares at a particular price (the exercise price). 271
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Redeemable securities
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Securities (such as bonds and preferred stocks) that can be redeemed by the issuer under specified conditions. 258
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Retention
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Paying out less than 100 percent of earnings. Compare with payout. 265
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Tax benefit
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A tax deduction or credit given for specified transactions. 268
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Warrant
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Similar to a call option but usually of longer duration. A put warrant is similar to a put option. 270
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Dividend payout
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pg 264
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Total payout ratio
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pg 265
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Dividends-to-book value
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pg 265
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Total payout-to-book value
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pg 265
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Retention ratio
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pg 265
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Net investment rate
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pg 266
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Growth rate of CSE
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pg 266
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Growth rate of CSE v2
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pg 266
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