Chapter 9 (Equity Securities)

Question 1

Equity investors can have this, which represents ownership of equity shares

Answer 1

Physical Certificate

Question 2

This registration is when the security is registered in the name of the investor’s brokerage firm on the issuer’s books, and the brokerage firm holds the security for the investor in “book-entry” form

Answer 2

Street Name Registration

Question 3

With this, the security is registered in the investor’s name on the issuer’s books, and either the company or its transfer agent holds the security in book-entry form.

Answer 3

Direct Registration

Question 4

Public companies with a simple capital structure are only required to report

Answer 4

Basic EPS

Question 5

These include potentially dilutive securities such as convertible bonds, convertible preferred stock, stock options and warrants.
Must report both basic and diluted EPS

Answer 5

Complex Capital Structures

Question 6

This is calculated on the assumption that all dilutive securities are either converted (in the case of convertible securities) or exercised (in the case of share options and warrants) leading to an increase in the number of common shares in issue, and potentially an increase in net income.

Answer 6

Diluted EPS

Question 7

This ratio equals a company’s dividend payments divided by its earnings and provides information about the long-term sustainability of a company’s dividend payments and policy.

Answer 7

Payout Ratio

Question 8

Dividends per Share/Earnings per Share

Answer 8

Payout Ratio

Question 9

The percent of income retained by a company is called its (x).

(Net Income - Dividends)/Net Income
or
1 - Payout Ratio

Answer 9

Retention Ratio

Question 10

The date when the board of directors declares a dividend payment. This action creates an obligation for the company to make a dividend payment.

Answer 10

Dividend Declaration Date

Question 11

The ex-dividend date is generally set one business day before the date of record. Ex-dividend means that the stock trades “ex” or without the dividend distribution.

Answer 11

Ex-dividend Date

Question 12

When a company declares a dividend, it sets a date of record. The date of record is the date the company determines who owns the company stock for the purpose of receiving the dividend.

Answer 12

Date of Record

Question 13

Some companies permit owners to maintain their ownership percentage in the event of any new offering of their stock.

Answer 13

Preemptive Right