Chapter 4 - Other Investor Services Flashcards
- What are investor services?
Services provided to investors, including custody, corporate actions, reporting, and asset servicing.
What is asset servicing?
The management of securities-related activities, such as dividends, stock splits, and mergers.
What is a corporate action?
An event initiated by a company that affects its securities, such as dividends, stock splits, or takeovers.
What is an ex-date in corporate actions?
The date on which a stock trades without the right to a declared dividend or corporate action.
What is a record date?
The date on which shareholders must be recorded in the company books to receive a corporate action.
What is a dividend?
A payment made by a company to its shareholders, typically from profits.
What are the two types of dividends?
Cash dividends and stock dividends.
What is a final dividend?
A dividend declared after the company’s financial year-end.
What is an interim dividend?
A dividend paid before a company’s annual earnings are finalized.
What is a dividend yield?
A ratio showing the annual dividend as a percentage of the stock price.
What is a stock split?
A corporate action where shares are divided into multiple shares, reducing price per share.
What is a reverse stock split?
A corporate action that reduces the number of shares to increase share price.
What is a bonus issue?
Free shares issued to shareholders, often to reward loyalty.
What is the difference between a bonus issue and a stock split?
A stock split adjusts share price, whereas a bonus issue increases shareholding without price adjustment.
How does a stock split impact market capitalization?
Market capitalization remains unchanged, but the number of shares increases.
What is a rights issue?
When a company offers existing shareholders the opportunity to buy new shares at a discount.
What is a nil-paid right?
A temporary security that allows shareholders to buy new shares in a rights issue.
What happens if a shareholder does not take up a rights issue?
The rights expire, or the shareholder can sell them in the market.
What is a share buyback?
When a company repurchases its own shares from the market.
Why do companies conduct share buybacks?
To reduce the number of outstanding shares, increasing earnings per share (EPS).
What is a merger?
The combination of two companies into one entity.
What is an acquisition?
When one company purchases another and takes control.
What is a hostile takeover?
When a company is acquired without the consent of its management.
What is a friendly takeover?
When a company agrees to be acquired.
