Corporate Securities

Question 0

Registrar

Answer 0

Doublechecks the actions of the transfer agent for the new shareholder physically receive the shares. Secondly, must be independent of the corporation. Lastly,makes sure that the company does not issue more shares been authorized by its charter and that all outstanding shares are accounted for.

Question 1

Transfer Agent

Answer 1

Keeps a record of all shareholders and transfers the securities from the old holder to the new holder by canceling the old certificates and issuing new ones.
Also, mails dividend checks and proxy materials for the company.

Question 2

Authorized Stock

Answer 2

The maximum number of shares permitted to be issued by corporation as stated in its corporate charter. Also, a corporation may choose to issue all or part of the shares authorized.

Question 3

Issued Stock

Answer 3

Stuff that has been sold by the company

Question 4

Treasury Stock

Answer 4

A company may require (buy back) some of it’s issued shares. The shares, temporarily put into the treasury of the company, may be resold in the secondary market at any time. No voting privileges. No dividends. Used primarily to fund stock option plans.

Question 5

Outstanding Stock

Answer 5

Issued Stock - Treasury Stock = Outstanding Stock

Question 6

Limited Liability

Answer 6

Cannot lose more than the amount invested.

Question 7

Residual Claim to Assets at Dissolution

Answer 7

Holders of common stock would have a claim to the assets of the corporation only after taxes, creditors, bondholders, and preferred stockholders (junior claim). Secondly, higher degree of risk to the investor then senior securities.

Question 8

Transfer Ownership

Answer 8

Marketable securities may be sold in the secondary market.

Question 9

Receive Dividends

Answer 9

When declared by the Board of Directors. Secondly, the Stockton and maybe it’s in stock or stock it owns another corporation. Lastly, paid on a quarterly basis.

Question 10

Declaration Date

Answer 10

The date that the corporations directors meet and declare a dividend

Question 11

Record Date

Answer 11

The date that a company closes its stockholder register for the purpose of identifying the recipients of the forthcoming dividend distribution (or some other right).

Question 12

Ex-Dividend Date

Answer 12

The date when the stock will begin trading in the marketplace without the value of a pending dividend included in the market price. 1) Two business days prior to the record date (except mutual funds). 2) Set by exchanges or FINRA; not set by the company. 3) it is a disadvantage to purchase just prior to ex-date since dividends are taxable. 4) regular way settlement is the trade date plus 3 business days it is often seen as T +3. 5) in a cash settlement, the trade in the settlement date are the same.

Question 13

Payable Date

Answer 13

The date in which the dividend is actually paid

Question 14

Due Bill

Answer 14

Sent to a contra (opposite) broker by a broker/dealer who represents a customer who is entitled to a dividend but did not receive one (for example, purchases for cash settlement after ex-dividend date).

Question 15

Regular Stock Split

Answer 15

A division of the outstanding shares of the corporation into a larger number of shares; the holder each outstanding shares entitled to a fixed number of new shares. 1) shareholders overall equity remains the same even though he or she owns more stock; the total dollar value of the shares does not change.

Question 16

2 For 1 Split

Answer 16

Shares x Price per Share= Total Market Value; 1) Shares x 2= Number of Shares

2) Price per Share / 2= 2 for 1 Price Per Share
* Here she will receive a new certificate for another hundred shares. Total market value remains the same.

Question 17

5 for 4 Stock Split

Answer 17

Shares will be decreased by 25% and Price will be reduced by 20% on the ex-date.

Question 18

Reverse Stock Split

Answer 18

Decrease number of shares; increased price per share.

Question 19

Vote at Stockholder Meeting

Answer 19

Voting is required for matters of the essential interest of the corporation. These include mergers, recapitalization, reorganizations, stock splits, reverse stock split, and issuance of convertible bonds or preferred stock.

Question 20

When Voting is not required

Answer 20

A repurchase of 100,000 publicly held shares into the companies treasury, declaring a cash or stock dividend, or a rights distribution.

Question 21

Statutory Voting

Answer 21

One share, one vote rule (most corporations)

Question 22

Cumulative Voting

Answer 22

Instead of apportioning votes equally amongst the candidates for director, cumulative voting allows shareholders to cast all of their votes for one candidate. This improves minority shareholders chances of naming representatives on the board.

Question 23

Proxy Voting

Answer 23

The written power of attorney given by shareholder authorizing another to vote on his or her behalf at corporate meetings.

Question 24

Pre-emotive Rights (Rights Offering)

Answer 24

A rights offering allows the shareholder to maintain his or her proportionate interest in a corporation that is offering more new stock for sale. Secondly, corporation usually issues existing stockholders one right for each share already owned. Lastly, the holder of these rights is entitled to subscribe to additional shares of stock at a reduced price. This is called subscription price and is in effect until rates expire (usually 30 days) or are sold in the market. Right straight to wherever the stock trades.

Question 25

Value of a Right

Answer 25

If you buy the stock before the ex-rights date or ‘cum rights,’ each share you but I will include one right that you can use to purchase additional stock on the rights offering.

Question 26

Market Quotes

Answer 26

Stocks are quoted in dollars and cents. Market prices are set by supply and demand or whatever people are willing to pay.

Question 27

Yield

Answer 27

A return on the investors capital:

Annual Dividends / Current Market Price = Current Yield

Question 28

Warrants

Answer 28

An inducement attached to new preferred stocks or bonds; gives the purchaser a long-term (usually 5-10 years) privilege of subscribing to one or more shares of common stock at a specified price reserved for him or her by the corporation from its unissued or treasury stock reserve.

Question 29

Warrant Specifications

Answer 29

1) when issued, the market price is lower than the stated exercise price.
2) do not pay dividends
3) someone’s our perpetual
4) sometimes issued as attachments to debentures (bonds). Used to secure a lower interest or coupon rate.
5) occasionally awarded to underwriters of a new stock issue
6) do you Bluetooth effect must be considered
7) Makes the new issue more marketable

Question 30

American Depository Receipts (ADRs)

Answer 30

A receipt showing evidence that shares of a foreign corporation are held on deposit or are under the control of a U.S. banking institution in a foreign country.

1) Registered in name of owner
2) Holders of ADRs may demand delivery of underlying foreign securities
3) Not considered a money-market instrument
4) Trade like stock in secondary markets

Question 31

Preferred Stock

Answer 31

1. Dividend Preference over income
   a. The preferred stockholders receive their dividends before common shareholders (must be declared by Board of Directors).
2. Dividend may be stated as percentage of par.
3. Dividend may be stated in dollars per share (if no par value)
4. A preferred dividend may be fixed or variable.

Question 32

Par Equation

Answer 32

Par= $100 and the dividend rate is 5%. Therefore, the annual dividend is $5.00 or $1.25 each quarter.

Question 33

Asset Preference of Preferred Over Common

Answer 33

1. In case of dissolution of the corporation, the preferred stockholders are senior to the common stockholders
2. Holders of preferred stock usually do not have voting rights and they never have pre-emptive rights.

Question 34

Types of Preferred Stock

Answer 34

1. Cumulative Preferred= If the company fails to pay a dividend or full dividend, the preferred stockholder would have the right to share in any additional earnings of the corporation along with the common shareholders
2. Participating Preferred= After the stated dividends have been paid, the participating preferred shareholder would have the right to share in any additional earnings of the corporation along with the common shareholders.
3. Convertible Preferred= Give the holder the right to convert his or her share(s) into common stock at a fixed ratio; likely to fuctuate in price during a period of stable interest rates based on supply and demand.
4. Callable Preferred= Gives the corporation the right to call in the preferred stock (usually at a premium). If preferred stock is called, its price will rise to just under the call price right after the announcement.

Question 35

Negotiability

Answer 35

Endorsement and assignments. Stockholder signs the back of the certificate or a separate stock power assignment.
Street name. Registered in the name of the broker/dealer.