Chapter 3:Equities Flashcards
What are the constitutional documents of a company known as
- Memorandum Of Association
- Legal Statement signed by initial shareholders to form a company. - Articles of Association
- Detail the relationship between the company and its owners. Written rules of the company.
When a shareholder appoints someone to vote on their behalf, what is this referred to?
Proxy voting
What are the features of a cumulative preference share
You are entitled to the dividend from previous years if the dividend is not paid out
Why might a company have a higher than average dividend yield ?
- The company has healthy levels of cash but limited growth potential due to regulations of selling prices. ( Utility Companies )
- The company has a low share price as it is expected to be relatively unsuccessful.
What options are available to an investor in a rights issue ?
They have preemptive rights to purchase more shares at a lower than market price so their shares aren’t diluted. Or they can let the rights lapse and may receive a payment.
Under what type of corporate action would an investor receive additional shares without payment?
Bonus Issues ( Scrip or Capitalisation )
Which body is responsible for approving listings on the LSE?
FCA
What is the function of a stock market index ?
They provide a benchmark for investors, allowing them to see how their portfolio is doing against the market in general. It provides a snapshot of how share prices are progressing across a group of companies.
The CAC 40 Index refers to which market ?
France
What are the key characteristics of an order-driven trading system?
It employs an electronic order book or an auction process to match trades in chronological order by price and quantity of shares. Investors are added to a buyers and sellers queue.
