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52 Cards in this Set
- Front
- Back
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Security |
An investment that represents either an ownership stake or a debt take in a company |
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Class A Stock |
Voting stock |
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Class B Stock |
Non-voting stock |
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Proxy |
Means of absentee voting |
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Cumulative Voting |
Allows stockholders to allocate their total votes in any manner they choose |
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Statutory Voting |
Allows stockholder one vote per share owned for each item on a ballot |
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What can stockholders vote on? |
1. Issuance of convertible securities or add'l common stock 2. Substantial changes to company such as merger or acquisitions 3. Stock splits |
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Market Price |
Price investors must pay to buy a share of stock |
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Common Stock |
Classified as: Authorized Issued Outstanding Treasury |
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Authorized Stock |
Specific number of shares the company has authorization to issue or sell |
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Issued Stock |
Stock that has been authorized and distributed to investors |
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Outstanding Stock |
Issued stock that has not been repurchased |
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Treasury Stock |
Stock a company has issued and repurchased |
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Preferred Stock |
Does not offer same voting rights as common stock Pays a fixed, semiannual dividend Has priority claims over common stock |
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Par Value |
Arbitrary number/value a company gives its stock |
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Book Value |
How much a share of stock would be worth if company was liquidated |
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Net Worth |
assets - liabilities = net worth |
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Balance Sheet |
Summarizes a company's assets, liabilities and equity (net worth) |
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Over the Counter Market (OTC) |
An interdealer market linked by computer terminals to FINRA (Financial Industry Regulatory Authority) |
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New York Stock Exchange (NYSE) |
Auction market. Buyers and sellers are matched |
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Forward stock split |
Increases number of shares and reduces the price Shares after a split = shares x A/B Price after a split - price x B/A |
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2:1 Forward Split |
# of shares x 2/1 = new # of shares Price x 1/2 = new price Ex: 100 shares @ $60 per share = $6000 100 x 2 = 200; 200/1 = 200 (new # of shares) 6000/200 = $30 (new price) |
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Reverse Split |
Fewer shares worth more per share |
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1:2 Reverse Split |
# of shares x 1/2 = new # of shares Price x 2/1 = new price Ex: 100 shares @ $5 = $500 100 x 1/2 = 50 shares 500/50 = $10 (new price) |
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Anti-dilution Provision |
Rule that a company's offering of stock must be offered to current stockholders before general public |
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Preferred stock is what type of security? |
Fixed income security (has fixed dividend) |
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Preferred Stock Characteristics |
- Fixed rate of return - Adjustable rate preferred - Limited ownership privileges - No maturity date or set maturity value |
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Categories of preferred stock |
- Straight preferred - Cumulative preferred - Convertible preferred - Participating preferred - Callable preferred |
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Straight Preferred Stock |
No special features. Missed dividends not paid to holder. Pays higher dividend because riskier than cumulative preferred |
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Cumulative Preferred Stock |
Missed dividends paid back to these holders before dividends distributed to common stock holders |
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Convertible Preferred Stock |
Owner can exchange each preferred share for shares of common stock. Issued with lower stated dividend |
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Participating Preferred Stock |
In addition to dividends, owners get a share of corporate profits after all dividends and interest due are paid |
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Callable Preferred Stock |
Company can buy back from investors at a stated price after a specified date. Issuer usually pays higher premium Highest rate of dividend |
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Dividend |
Distribution of a company's profits to its stockholders |
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Current Yield |
The annual dividend divided by the current stock market value of the stock Current yield = annual dividend/current market value of stock |
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Stock Certificate |
Indicates the shares of a corporation a person owns Identifies the company name, # of shares, investor's name, CUSIP # |
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Transfer Agent |
- Ensures securities are issued to correct owner - Cancels old and issues new certificates - Maintains record of ownership - Issues with lost, stolen or destroyed certs - Distributes additional shares |
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Registrar |
A state entity. State usually employs a bank or trust company to perform the functions. Must be independent of issuing corporation. - Ensures corp. does not have more shares outstanding than have been authorized - Certifies that a bond represents a legal debt of the issuer |
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Ex-Dividend Date |
Two business days before the record date |
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Dividend Record Date |
Stockholders of record on the record date receive the dividend distribution |
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Payable Date |
Three or four weeks after the record date, the dividend disbursing agent sends dividend checks |
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D.E.R.P. |
- Declaration (Board of Directors) - Ex-Dividend Date - 2 business days before record date - Record date (BOD) - Payable Date (BOD) |
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Due Bill |
Printed statement showing a buyer's right to a dividend |
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Rights Offering |
Allows stockholders to purchase common stock below current market price. Rights are valued separately from the stock and trade in secondary market |
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Subscription Right |
Certificate representing a short-term (30 to 45 day) privilege to guy additional stock |
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Warrant |
Certificate granting its owner the right to purchase securities from the issuer at a specified price as of the date of the warrant. Price is normally higher than current market price. |
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Origination of Warrants |
Offered as "sweeteners" in connection with other securities such as bonds. Offerings are often bundled as "units." Typically has a life of 5 years. |
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American Depository Receipts (ADR's) |
U.S. securities that facilitate the trading of foreign stocks in US markets. Negotiable security that represents a receipt for shares of stock in a non-US corporation |
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Real Estate Investment Trusts (REIT's) |
Company that manages a portfolio of real estate investments in order to earn profits for shareholders. Normally traded publicly. |
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Equity REIT |
Owns property |
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Mortgage REIT |
Owns mortgages |
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Hybrid REIT |
Both property and mortgages |
