Equity: Intro to Equity Securities

Question 1

American Depository Reciept

Answer 1

A US dollar-denominated security that trades like a common share on US exchanges.

Question 2

American Depository Share

Answer 2

The underlying share on which American Depository receipts are based. They trade in the issuing companies domestic market

Question 3

Basket of listed depository reciepts

Answer 3

An exchange traded fund (ETF) that represents a portfolio of depository receipts

Question 4

Blue Chip

Answer 4

Widely held large market capitalization companies that are considered financially sound and are leaders in their respective industry or local stock market

Question 5

Common shares

Answer 5

A type of security that represents an ownership interest in a company

Question 6

Convertible preference shares

Answer 6

A type of equity security that entities shareholders to convert their shares into a specified number of common shares.

Question 7

Cumulative preference shares

Answer 7

Preference shares for which ant dividends that are not paid accrue and must be paid in full before dividends on common shares can be paid

Question 8

Depository Bank

Answer 8

A bank that raises funds from depositors and other investors lends it to borrowers.

Question 9

Depository reciept

Answer 9

A security that trades like an ordinary share on a local exchange and represents an economic interest in a foreign company

Question 10

Foreign exchange gains (or losses)

Answer 10

Gains (or losses) that occur when the exchange rate changes between the investors currency and the currency that foreign securities are denominated in

Question 11

Free float

Answer 11

The number of shares that are readily and freely tradable in the secondary market

Question 12

Global depository receipt

Answer 12

A depository receipt that is issued outside of the company’s home country and outside of the United States.

Question 13

Global Registered Share

Answer 13

A common share that is trades on different stock exchanges around the world in different currencies

Question 14

Leverage buyout

Answer 14

A transaction whereby the target company’s management team converts the target to a privately held company by using heavy borrowing to finance the target company’s outstanding shares

Question 15

Management BuyOut

Answer 15

A leveraged buyout event in which a group of investors consisting primarily of the company’s existing management purchase at least controlling interest in outstanding shares. At the extreme, they may purchase all shares and take the company private

Question 16

Non-Cumulative preference shares

Answer 16

Preference share for which dividends that are not paid in the current or subsequent period ls are forfeited permanently (instead of being accrued and paid at a later date)

Question 17

Non-participating preference shares

Answer 17

Preference share that do not entitle shareholders to share profits of the company. Instead, shareholders are only entitled to receive a fixed dividend payment and the par value of the shares in the event of liquidation.

Question 18

Participating preference shares

Answer 18

Preference shares that entitle shareholders to receive the standard preferred dividend plus the opportunity to receive an additional dividend if the company’s profits exceed a pre-specifies level.

Question 19

Preference Shares

Answer 19

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

Question 20

Private Equity Securities

Answer 20

Securities that are not listed on public exchanges and have no active secondary market. They are issued primarily to institutional investors via non-public offerings, such as private placements

Question 21

Private investment in public equity

Answer 21

(PIPE) an investment in the equity of a publicly trade firm that is made at a discount to the market value of the firms shares

Question 22

Sponsored

Answer 22

A type of depository receipt in which the foreign company whose shares are held by the depository has a direct involvement in the issuance of the receipts.

Question 23

Statutory voting

Answer 23

A common method of voting where each share represents one vote

Question 24

Unsponsored

Answer 24

A type of depository receipt in which the foreign company whose shares are held by the depository has no involvement in the issuance of the receipts

Question 25

Venture capital

Answer 25

Investments that provide “seed” or startup capital, early-stage financing, or later-stage financing (including mezzanine-stage financing) to companies that are in early development stages and require additional capital for expansion or preparation for an IPO

Question 26

Vote by Proxy

Answer 26

A mechanism that allows a designated party- such as another shareholder, a shareholder representative, or management-to vote on the shareholders behalf