Chapter 12: Types of Stocks Flashcards
Publicly listed shares traded on the stock exchange.
Stock
sometimes referred to as ordinary shares—represents partial ownership in a company.
Common stock
This stock class entitles investors to generated profits, usually paid in dividends.
Common stock
Holders of this stock class have rights to a company’s assets in a liquidation event, but only after preferred stock shareholders and other debt holders have been paid.
Common stock
also known as preference shares, entitles the holder to regular dividend payments before dividends are issued to common shareholders.
preferred stock
doesn’t carry voting rights and suits investors seeking reliable passive income
preferred stock
refer to equities expected to grow at a faster rate compared to the broader market.
growth stocks
True or False
preferred shareholders also get repaid first if the company dissolves or enters bankruptcy
True
tend to outperform during times of economic expansion and when interest rates are low.
growth stocks
trade at a discount to what a company’s performance might otherwise indicate, typically having more attractive valuations than the broader market.
value stocks
such as financial, healthcare, and energy names—tend to outperform during periods of economic recovery, as they usually generate reliable income streams.
value stocks
are equities that provide regular income by distributing a company’s profits, or excess cash, through dividends that are higher than the market average.
Income stocks
these stocks—think utilities—have lower volatility and less capital appreciation than growth stocks, making them suitable for risk-averse investors who seek a regular income stream.
Income stocks
Investors can access income stocks through the __________.
Amplify High Income ETF
are well-established companies that have a large market capitalization.
Blue-chip stocks
are directly affected by the economy’s performance and typically follow economic cycles of expansion, peak, recession, and recovery.
Cyclical stocks
They usually display more volatility and outperform other stocks in times of economic strength when consumers have more discretionary income.
Cyclical stocks
operate in “recession-proof” industries that tend to perform reasonably well irrespective of the economy.
Non-cyclical stocks
usually outperform cyclical stocks in an economic slowdown or downturn as demand for core products and services remains relatively consistent.
Non-cyclical stocks
generally provide consistent returns in most economic conditions and stock market environments.
Defensive stocks
These companies typically sell essential products and services, such as consumer staples, healthcare, and utilities.
Defensive stocks
may help protect a portfolio from steep losses during a sell-off or bear market.
defensive stock
A ________________ may also be a value, income, non-cyclical, or blue-chip stock.
defensive stock
When a company goes public, it issues stock through an
initial public offering (IPO)
typically gets allocated at a discount before the company’s stock lists on the stock exchange.
initial public offering (IPO)
It may also have a vesting schedule to prevent investors from selling all of their shares when the stock commences trading.
initial public offering (IPO)
a middle-tier over-the-counter (OTC) market for U.S. stocks operated by OTC Markets Group.
OTCQB
is equity valued at less than $5 and is considered highly speculative.
penny stock
emphasize environmental protection, social justice, and ethical management practices.
Environmental, social, and corporate governance (ESG) stocks
have gained popularity with millennials in recent years—a socially conscious generation who are more likely to invest in things they believe and support.
ESG stocks
risk-averse investors who seek regular income through dividend payments.
Income stocks suit
