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22 Cards in this Set
- Front
- Back
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Order of asset distribution if company liquidates
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1. taxes
2. secured debt 3. unsecured debt 4. preferred stock 5. common stock |
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Two types of voting structures
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Regular voting -- one vote per share per director (best for substantial shareholders)
Block voting - one vote multiplied per number of directors (best for minority shareholders) |
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What is a normal round lot unit of stock
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100 shares
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Is common stock ever callable?
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no
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How many days for "regular way" settlement of common stocks and bonds
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trade date plus 3 business days
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Cash Transactions differ from regular way settlements in what way?
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Cash transactions are settled on the same day.
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what type of security provides the best hedge against inflation?
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common stock
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what is the primary purpose of a stock split?
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increase the marketability of the stock
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Dividends are paid on
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common stock
preferred stock mutual fund shares ADR (american depository receipts) - foreign co |
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how are dividends issued?
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declared by the Board of Directors
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When does a dividend become a liability on the balance sheet of the corporation?
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on the date they are declared
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How often are dividends normally paid to investors?
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quarterly
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how do you calculate current yield?
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annual dividend / current market price
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how do we figure which shareholders get a dividend?
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Declaration date
Record date -- only shareholders in at time of record date Payable date - date dividend actually gets paid |
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What is the Ex-Date
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Two business days before the record date (set by FINRA). if you buy the stock ON OR AFTER Ex-Date, you are buying (without) the dividend
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what happens to a stock on the morning of the Ex- dividend date?
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always opens down because those new shareholders don't get that dividend
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what is treasury stock?
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Repurchased stock.
stock bought back by the company from the market. no dividends or voting rights not used in calculating EPS of the corporation just a footnote on the balance sheet -- just sits there |
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Why would a company repurchase shares (treasury stock)?
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1. to increase earnings per share (less outstanding shares)
2. finance future acquisitions (takeover) 3. to provide stock for employee option plan 4. fight takeover attempt |
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how do you calculate outstanding stock?
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issued stock - treasury stock = outstanding stock
(outstanding shares are the only shares that vote, receive dividends, calculate earnings per share) |
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What is a warrant?
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a long-term option to buy stock of the company at a given price.
they are traded separately from the security initially issued with. market premium exists when there is a spread between exercise price and current market price most frequently issued with debentures dividends are not paid on warrants |
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What is a debenture
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an unsecured bond
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are mutual funds allowed to put warrants in the portfolios they manage?
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yes
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