Chapter 6 Terms Flashcards
Residual Owners
stockholders of a firm are the owners, who are entitled to dividend income and a prorated share of the firm’s earnings only after all the firm’s other obligations have been met
Routine Decline
a drop of 5% or more in one of the major market indexes, like the Dow Jones Industrial Average (DJIA)
Correction
a drop of 10% or more in one of the major market indexes
Bear Market
a drop of 20% or more in one of the major market indexes
Equity Capital
evidence of ownership position in a firm, in the form of common stock.
Publicly Traded Issues
These are stocks available for anyone to buy or sell on the open market exchanges
Public Offering
an offering to sell to the investing public a set number of shares of a firm’s stock at a specified price
Rights Offering
an offering of a new issue of stock to existing stockholders, who may purchase new shares in proportion to their current ownership
Stock Spin-Off
conversion of one of a firm’s subsidiaries to a stand-alone company by distribution of stock in the new company to existing shareholders
Stock Split
when a company increases the number of shares outstanding by exchanging a specified number of new shares of stock for each outstanding share
Treasury Stock
shares of stock that were originally sold by the company and have been repurchased by the company. Share repurchases are often called “buybacks.”
Classified Common Stock
common stock issued in different classes, each of which offers different privileges and benefits to its holders
Par Value
the stated, or face, value of a stock
Book Value
the amount of stockholders’ equity
Market Value
the current price of the stock in the stock market
