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47 Cards in this Set
- Front
- Back
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Security |
Investment that represents ownership or debt stake in a company Investors become part owner by buying shares of a company's stock |
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Debt Security |
Security representing an investor's loan to an issuer |
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Issuer |
-Corporation, municipality, federal government, federal agency -Promises to repay debt at a specified date with interest |
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Balance Sheet |
Summary of company's assets ($), liabilities (-$) & equity (net worth) |
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Net Worth |
assets - liabilities = ? assets = liabilities + ? |
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Preferred Stock |
-Represents ownership in a corporation -Issued w/ a stated dividend, paid out before common stock holders -Generally has no voting rights/appreciation potential |
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Authorized Stock |
Specific number of shares a company has the ability to sell. -Laid out in the original charter -Usually only a portion are sold -Amendment w/ stockholder vote needs to be filed to add more |
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Issued Stock |
Stock that has been issued & distributed to investors |
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Unissued Stock |
-Unissued shares can be reserved for: new capital, paying stock dividends, stock purchase plans, excanging convertable bonds, preferred stock, outstanding stock warrants -Does not carry same rights as issued stock -Not considered in total capitalization |
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Outstanding Stock |
Any shares that a company has issued and not repurchased (investor owns) |
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Treasury Stock |
Stock a corporation has issued and repurchased. -Can be held indefinitly, repurchased or retired -Does not have the same rights as common stock (dividends/voting) Does this to: increase earnings/share, stock purchase program, future acquisitions |
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Common Stock Calculation |
Issued Stock - Treasury Stock = Outstanding Stock Treasury Stock = Issued Shares - Outstanding Shares |
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Par Value |
Arbitrary value given in the articles of incorporation -usually listed on stock certificates |
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Book Value |
Current liquidation value of a share (if the entire company was liquidated) -Generally used by analyst -difference of tangible assets & liabilities, divided by outstanding shares -Generally differs from market value |
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Market Value |
Price investors pay to buy the stock Influenced by company's business prospects & consequent effect on supply & demand. |
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Voting Rights |
Stockholders right to vote for members of the board of directors & on matters of corporate policy (issuance of convertible securities - dilutitive, additional common stock, splits, mergers) |
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Statutory Voting |
Stockholders can cast 1 vote/share owned for each item on the balot - Benefits larger shareholders |
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Cumulative Voting |
Stockholders can allocate their total votes in any manner they choose (across the balot) -Benefits smaller investor |
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Proxy |
Way for stockholders to participate in meetings they cannot attend. -is canceled if they attend the meeting, submits subsequent proxy, dies -proxy solicitation = specific meeting, submitted to SEC -Proxy contest - control of company is changing, contestants must register with SEC |
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Voting Stock |
Class A Has voting rights |
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Non-Voting Stock |
Class B Does not have voting rights Provides a way to add capital but maintain management |
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Preemptive Right |
right of current stockholders to buy more shares first to prevent dilution |
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Limited Liability |
-Stockholders cannot lose more then the amount they invest. -Can receive list of stockholders & annual financial statements (not BOD minutes) |
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Forward Stock Split |
Increase in number of shares; reduction in market price Multiply by first number, divide by second (2:1) |
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Reverse Stock Split |
Number of shares decreases; price per share increases Multiply by first number, divide by second (1:2) |
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Long |
Buying a security, commodity or contract (buy low, sell high) |
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Short Sale |
Selling a security that the seller does not own (borrowed from broker) Sell high, buy low |
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Dividends |
Cash Stock (additional shares) Property (shares in a subsidiary/product) |
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Capital Gains |
Realized Gain (Sold at a high) -taxable event Unrealized Gain (Stock is not sold) |
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Preferred Stock |
Does not have the same voting rights as common stock -dividends paid first -paidout before CS holders in the event of bankruptcy |
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Fixed Income Security |
Term that describes a preferred stock. Price changes with interest rate, not with business prospects - Fixed dividend rate |
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Straight Preferred (noncumulative) |
Stock with no special features beyond stated dividend payment. Missed dividends are not paid out. |
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Cumulative Preferred |
Stock that gets missed dividends before CS would get anything |
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Convertible Preferred |
Preferred shares that can be converted into common stock -conversion price set on stock cert -price fluctuates with CS -lower dividend because they can convert |
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Participating Preferred |
Get fixed dividends & profits that remain after CS dividends are paid out -normal preferred 6% Participating preferred 9% |
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Callable Preferred (redeemable) |
Preferred stock that can be bought back from investors at a stated price & after a specified date - replace stock with a better interest rate (for investor - dividends end at call date - usually called at a premium |
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Dividend/Current Yeild |
Annual dividend divided by current market value |
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Rights |
Security that allows stockholders to purchase common stock below the current market price -valued different then stock/sold on secondary market 1.Exercise 2.Sell 3.Do nothing -Short term (30 days) |
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Cum/Ex Rights |
Cum-gets rights Ex-does not get rights |
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Cum Rights Formula |
Market Price-Subsription Price/# of rights to purchase+1 Ex Formula does not include the +1 |
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Standby Underwriting |
Investment banker that agrees to purchase rights not bought by stockholders |
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Warrants |
Certificate granting owner right to purchase securities at a specified price (usually high) -long term -offered as a sweetener Can: 1. Sell 2. Exercise 3. Let Expire |
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American Depositary Receipt (ADR) |
US securities that facilitate trading of foreign stocks. Supported by custodian bank |
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Real Estate Investment Trust (REIT) |
Trust that uses pooled capital of investors to invest in direct ownership of income property or mortgage loans -75% investment in RE -75% income from rent/mortgage -90% net investment income to SH |
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Equity REIT |
Trust owning exclusively property |
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Mortgage REIT |
Trust owning exclusively mortgages on property |
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Hybrid REIT |
Trust owning property & mortgages on property |
