Chapter 1, Equity securities

Question 1

Bid Price is?

Answer 1

Price willing to buy stock

Question 2

Ask price is?

Answer 2

Price willing to sell stock

Question 3

Difference between the Bid and Ask price?

Answer 3

The spread

Question 4

The number of Authorized shares many only be changed by…

Answer 4

Majority vote of the shareholders

Question 5

The amount of distributed stock - treasury stock is?

Answer 5

Outstanding shares

Question 6

Keeps a list of all stockholders, canceling and issuing stock certificates is?

Answer 6

Transfer agent

Question 7

Makes sure company does not issue more shares that the charter authorizes

Answer 7

Registrar

Question 8

Selling bonds thus borrowing money from investors

Answer 8

debt financing

Question 9

Selling stock to raise money

Answer 9

equity financing

Question 10

When a corporation raises most of its money through bonds….

Answer 10

Leveraged capital structure

Question 11

Liquidation rights (in order)

Answer 11

1. Bond holders
2. Preferred shareholders
3. Common shareholders

Question 12

Who decides if dividends are paid?

Answer 12

Board of directors

Question 13

Stock dividends are taxed when?

Answer 13

When the share are sold

Question 14

All dividends in arrears must be paid to what type of preferred stock

Answer 14

cumulative preferred stock

Question 15

The option to purchase a stock at a specific price (strike price)

Answer 15

Call

Question 16

The option to sell a stock at a specific price (strike price)

Answer 16

Put

Question 17

Buying calls and selling puts, expecting stock price to rise….

Answer 17

Bullish

Question 18

Selling calls and buying put, expecting the stock to stay or decline

Answer 18

Bearish