Fil 241 Test 3

Front 1

Common stock

Back 1

-ownership in a corportation
-1 vote per stock
-riskier than preferred, and bonds

Front 2

common shareholders may elect

Back 2

members of the board of directers

Front 3

members of the board of directors can be elected by _____ voting or _____voting

Back 3

cumulative voting
straight voting

Front 4

preferred stockholders have a ___ claim on earnings and assets compared to common stockholders

Back 4

prior Or Preferred

Front 5

cumulative

-part of preferred stock-

Back 5

arrearage (overdue) plus current dividends paid before any payment is made to common stockholders

Front 6

Non-participating

-part of preferred stock-

Back 6

preferred receive a fixed level of dividends, thus not participating in possible high earnings level of the corportation

Front 7

Adjustable rate

-part of preferred stock-

Back 7

preferred, indexed to market rates vary as the index varies

Front 8

preferred stockholders and voting

Back 8

they are usually excluded from voting for board of directors and shareholder issues

Front 9

many corporations buy ____ stock

Back 9

preferred

Front 10

the largest holder of equity

Back 10

households

Front 11

convertible preferred stock

Back 11

convertible to common stock at specific common price or number of shares (conversion ratio)
-dividents received until conversion

Front 12

convertible bonds

Back 12

convertible to common stock at specific common price or number of shares

Front 13

convertible bonds are mostly _____ debt and hence have a ______ risk

Back 13

subordinated
higher

Front 14

initial public offering (IPO)
or
unseasoned offering

Back 14

the first time shares are sold in the market.

Front 15

equities may be sold ___ to the investors by the _____

Back 15

directly
firm

Front 16

equties may be sold to existing shareholders in a ___ ____

Back 16

rights offering

Front 17

in the secondary market for equity securities, stocks may trade on :

Back 17

exchanges or over the counter

Front 18

secondary market for equity securities provides:

Back 18

investor liquidity

Front 19

stable prices are related to the extent of

Back 19

- breadth
- depth
-resiliency

Front 20

breadth of the market

Back 20

number of varied traders of the stock

Front 21

depth of the market

Back 21

extent to which there are conditional orders to buy and sell below and above the current price, respectively

Front 22

resiliency of the market

Back 22

the ability of the market to attract buyer/sellers when the stock prices decreases/increases, respectively.

Front 23

secondary markets bring buyers/sellers together in 4 ways

Back 23

1) direct search- a buyer may incur search costs and find a seller on their own

2) a broker may bring buyer and seller together, charging a commission

3) a dealer may sell/buy (bid/ask) securities from an inventory of securities, reducing search costs. The dealers return is the bid/ask spread.

4) an auction market allocates the selling shares to the highest bidder, providing a buyer/seller.