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Solomon SIE Exam Prep > 1.3 Common Stock > Flashcards

1.3 Common Stock Flashcards

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SIE Exam flashcards
1
Q

An equity investor can make money by?

A

Buying low and selling high

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2
Q

Capital gain / appreciation

A

A gain in the original capital invested

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3
Q

Dividends

A

Cash or stock paid to shareholders for each chair that they own

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4
Q

Our company is required to pay dividends yes or no?

A

No

Companies are not required to pay dividends

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5
Q

Share prices are determined by?

A

Supply and demand

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6
Q

Most corporations issue what kind of stock?

A

Common stock

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7
Q

More shares equal more?

A

Ownership

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8
Q

Treasury shares / Treasury stock

A

Shares that have been issued but are not owned by investors instead they are owned by the company

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9
Q

Treasury shares have NO _______ rights

And Pay NO ______________

A

Rights

Dividends

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10
Q

Shares outstanding

A

Stock remaining in circulation, after an issuer re-purchases shares removing them from circulation

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11
Q

How to find the amount of shares outstanding?

A

Issued shares - treasury shares

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12
Q

MARKET CAPITALIZATION

A

Share price x shares outstanding

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13
Q

Treasury shares are not included in…

A

Shares outstanding

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14
Q

Who buys and sells securities out of its own inventory?

A

Dealer

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15
Q

What market is it win an investor cells to another investor

A

Secondary

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16
Q

The first time in issue or sell shares to the public

A

Initial public offering (IPO)

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17
Q

The investment bank that helps an issue or sell it securities is known as

A

Underwriter

18
Q

This person acts as a go-between for a buyer and seller in the secondary market

A

Broker

19
Q

Shares that have been re-purchased by the company and removed from public circulation are?

A

Treasury shares

20
Q

Common stock shareholders rights

A

Right to inspect records

Right to vote on relevant matters

Right to receive dividends

Right of limited liability

Transfer right

Preemptive rights

Right to sue for wrongful acts

21
Q

Par value of common stock

A

For investors in common stock, the par value of a share is set arbitrarily

22
Q

Physical certificate

A

Registered in owners name

23
Q

Street name registration

A

Registered on the issuers books in the name of the owners brokerage firm

“ Book entry form”

Beneficial rights to ownership

Belong to the customer not the brokerage firm

24
Q

Direct registration system (DRS)

A

Owners get the benefits of direct ownership by receiving reports, dividends and proxies directly from the issuer

25
Q

The Registrar

A

Make sure the company always has the proper number of shares outstanding

26
Q

The registrar monitors and…

A

audits the transfer agent

27
Q

Registrars are

A

usually banks

28
Q

Penny stocks are

A

Low priced equity securities that are not actively traded

Usually below $5

29
Q

Investing in penny stocks can be

A

RISKY

30
Q

Penny stocks are usually quoted on one of two over the counter quotation systems which are?

A

Over the counter bulletin board (OTCBB)

OTC Link

31
Q

Customers must be given what prior to their first penny stock transaction?

A

A risk disclosure document

32
Q

The broker dealer must provide what to the customer for the penny stock?

A

The current market bid and offer

33
Q

Before selling a penny stock to a new customer, a broker dealer must conduct a?

A

Suitability analysis which covers the customers financial situation, investment experience, and financial objectives

34
Q

The customer must be provided with the amount and source of any ______________ That the broker dealer received in connection with the trade

A

Compensation

35
Q

A broker dealer does NOT Have to conduct a suitability analysis if the customer is?

A

And established customer

36
Q

Common stock holders are paid

A

After bondholders and preferred stockholders have been paid

37
Q

Which is NOT a type of common stock?

A. Re-issued stock

B. Treasury stock

C. Authorized stock

D. Outstanding stock

A

A. Reissued Stock

38
Q

In cases where a stock or bond is not endorsed or not endorsed properly, the stockholder can do what?

A

Send a stock or bond power

39
Q

If they come in stockholder is unable to attend a meeting he can still vote on any issue presented by?

A

Submitting a vote by proxy

40
Q

The right to transfer is what gives the shareholder the right to sell their shares….

A

To the highest bidder

Solomon SIE Exam Prep (23 decks)

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