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48 Cards in this Set
- Front
- Back
Money Market
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Refers to transactions in short-term debt instruments
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Capital Market
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Refers to the market for long-term debt and equity securities.
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Prime Rate
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The interest rate charged on loans made by commercial banks to their best customers.
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What are the most widely held short-term debt instruments?
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U.S. Treasury Bills
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Proportionate Ownership
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A stockholder's ownership is in proportion to all the common stock outstanding.
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Transfer Rights
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The shareholder has the right to transfer their ownership to another party (sell their stock) or could give it away.
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Dividends
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Stockholders may share in the profits of the corporation.
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Preemptive Rights
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Existing shareholders have the right to purchase new shares allowing them to maintain their proportionate ownership when more shares are issued to the public.
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Voting
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Shareholders vote in proportion to their holdings, either at the meeting or by proxy (absentee vote).
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Protection
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The shareholder has the right to take actions to protect the corp. against the wrongful acts of management.
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What does it mean if a stock certificate is held in street name?
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Securites are held in the name of the broker, but owned by the customer. All securities held in margin account are in street name.
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Authorized Stock
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The amount the corporation has the power to issue.
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Outstanding Stock
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Stock that has been issued and is in the hands of stockholders.
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Treasury Stock
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Issued stock that is repurchased in the market by the issuing corporation. It is authorized and issued but not outstanding. It appears on the balance sheet as a deduction from issued stock.
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Name the 2 methods of voting for positions on the Board of Directors.
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1. Regular (Statutory)
2. Cumulative (Block) |
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If a stockholder owns 100 shares of stock and six persons are to be elected to the Board. Under Regular (statutory) voting, how would the votes be cast?
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The stockholder would cast 100 votes each for 6 people.
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If a stockholder owns 100 shares of stock and six persons are to be elected to the Board. Under Cumulative(block) voting, how would the votes be cast?
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The stockholder can cast these votes in any way desired.
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What are the 3 terms commonly used in referring to the value of stock?
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1. Par Value
2. Book Value 3. Market Value |
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Par Value
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The value imprinted on a security, such as a stock certificate or bond, used to calculate a payment, such as a dividend or interest; face value
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Book Value
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Tangible net asset value; Equal to tangible net asset value per share.
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Market Value
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the current price at which the shares could be bought or sold in the marketplace.
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Preferred Stock
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An equity security that is entitled to receive dividends before the common stockholders.
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Cumulative Preferred Stock
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Stockholders are entitled to the current year's dividend and those dividends accumulated from prior years.
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Participating Preferred Stock
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Entitled to a specific dividend, but also participate with the common stockholders dividends. Fixed to a minimum, but not a maximum.
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Convertible Preferred Stock
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Can be converted into common stock.
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Normally what is the par value of corporate bonds?
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$1,000
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When do corporate bonds pay interest?
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Semi-annually
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Corporate Bonds
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A form of debt and a promise by the corp. to pay a sum of money at a specified future date along with interest payments.
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Bonds selling for a price greater than par are said to be selling at a ________?
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Premium
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Bonds selling for a price less than par are said to be selling at a ________?
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Discount
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How much would a bond sell for if the quoted price was 103 3/4
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103 full points x $10 = 1030
3/4 point x $10 = 7.50 Total Price = 1037.50 |
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Mortgage Bonds
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Secured by mortgages on real estate.
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Equipment Trust Certificates
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Issued by transportation companies and are secured by liens on equipment.
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Debenture Bonds
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Unsecured bonds
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Subordinated Debentures
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Subordinated in their claim on the assets of the corporation. The last type of debt to be paid off in a corp. liquidation.
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Guarenteed Bonds
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Bonds in which the payment of principal and interest is guarenteed by another corporation.
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Income Bonds
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Bonds where interest payments are only made if the corporation's earnings are sufficient.
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Parity Price
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The price the stock must sell at to be equal in value to the bond.
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What is the order of payments in corporate liquidation
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1. Taxes
2. Senior Lien Bonds(1st Mortgages) 3. Bank loans, accts payable, debentures, and other unsecured debt 4. Subordinate Debentures 5. Preferred Stock 6. Common Stock |
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Zero Coupon Bond
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A bond that is purchased by an investor at a deep discounted price and the bond pays all of its interest at maturity.
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Nominal Yield
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The fixed interest rate printed on the bond or the face rate.
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Current Yield
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Annual interest rate on a bond divided by the current market price of the bond.
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Yield to Maturity
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Determines the rate of return a bondholder would receive, if the bond is held to the maturity date.
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Rights
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They allow a common stockholder to subscribe to a new issue of common stock before it is offered to the public.
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Warrants
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A marketable option which gives the holder the long-term right to buy a certain number of common shares, at a specified price during a specific time period.
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American Depositary Receipts (ADRs)
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Receipts traded in the US that represent shares of a foreign company.
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What is the purpose of Real Estate Investment Trusts?
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To enable the smaller investor to invest in real estate.
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Collateralized Mortgage Obligations (CMOs)
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Bonds that represent a pool of mortgages. Normally $1000 and pay interest semi-annually.
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