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9 Cards in this Set
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Security Debt security Debt investment |
an investment that represents eitheran ownership stake or a debt stake in a company A debt securityis usually acquired by buying a company’s bonds. A debt investment is a loanto a company in exchange for interest income and the promise to repay theloan at a future maturity date. It does |
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Stock bonds |
Stock represents equity or ownership in a company, and bonds |
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assets—what the company owns: cash in the bank, accounts receivable (money it is owed), investments, property, inventory, and so on; liabilities—what the company owes: accounts payable (current bills itmust pay), short- and long-term debt, and other obligations; and equity—the excess of the value of assets over the value of liabilities (thecompany’s net worth). |
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Net worth |
Assets = liabilities + net worth Assets – liabilities = net worth |
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Common stock |
Common stock can be classified as:■ authorized; ■ issued;■ outstanding; and■ treasury. |
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Authorized stock Outstanding stock |
Authorized stock refers to a specific number of shares the company hasauthorization to issue or sell. Outstanding stock includes any shares that a company has issued but hasnot repurchased—that is, stock that is investor owned. |
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Treasury stock |
Treasury stock is stock a corporation has issued and subsequently repur-chased from the public. The corporation can hold this stock indefinitely orcan reissue or retire it. can increase market share Treasury stock does not carry the rights of outstanding commonshares, such as voting rights and the right to receive dividends. |
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par value |
For investors, a common stock’s par value is meaningless. It is an arbitraryvalue the company gives the stock in the company’s articles of incorporationand has no effect on the stock’s market price. When the corporation sells stock, the money received exceeding parvalue is recorded on the corporate balance sheet as capital in excess of par,also known as paid-in surplus, capital surplus, or paid-in capital. |
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book value |
A stock’s book value per share is a measure of how much a commonstockholder could expect to receive for each share if the corporation wereliquidated. Assetes- libilites / number of shares |
