Equity and Debt Securities

Question 0

Describe and evaluate the basic features of government, municipal, and corporate that

Answer 0

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Question 1

Compare and contrast the basic features of common and preferred stock

Answer 1

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Question 2

Identify the unique features of American depository receipts and real estate investment trusts

Answer 2

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Question 3

Common stock

Answer 3

Security
represents corporate ownership Owners of common stock exercise control by electing a Board of Directors and voting on corporate policy.

CFA: type of security that represents an ownership interest in a company.

Question 4

Equity

Answer 4

Common and preferred stockholders ownership interests in a corporation.

CFA: Assets less liabilities; the residual interest in the assets after subtracting the liabilities.

Question 5

Preferred stock

Answer 5

An equity security that represents ownership and a corporation. It is issued with a stated dividend, which must be paid before dividends are paid to common stockholders. It generally carries no voting rights.

CFA: A type of equity interest which ranks above common shares with respect to the payment of dividends and the distribution of the companies net assets upon liquidation. They have characteristics of both debt and equity securities.

Question 6

Callable preferred stock

Answer 6

A type of preferred stock issued with a provision allowing the corporation to call in the stock at a certain price and retire it.

Question 7

Cumulative preferred stock

Answer 7

An Equities security that offers the holder any unpaid dividends in arrears. These dividends accumulate and must be paid to the cumulative preferred stockholder before any dividends can be paid to the common stockholders.

CFA: preference shares for which any dividends that are not paid accrue and must be paid in full before dividends on common shares can be paid.

Question 8

Call

Answer 8

1) an option contract giving the owner the right to buy specified amount of an underlying security at a specified price within a specified time. (2) the act of exercising a call option.

CFA: an option that gives the holder the right to buy an underlying asset from another party at a fixed price over a specified period of time.

Question 9

Noncumulative preferred stock

Answer 9

An equities security that does not have to pay any dividends in arrears to the holder.

CFA: noncumulative preference shares: preference shares for which dividends that are not paid in the current or subsequent periods are forfeited permanently (instead of being accrued and paid at a later date).

Question 10

Common stock ownership features

Answer 10

Stockholders are entitled a portion of earnings, dividends, and management voting decisions.