Equity Market Flashcards
Just like commercial banks, they issue stocks to boost their capital base.
Finance Companies
They invest a large number of premiums in the stock market.
Insurance Companies
Give the distinctions between debt and equity.
TRMVCR
Tax implications
Return Expectations
Maturity
Voice in Management
Claim on Assets and Income
Risk Profile
Which is prioritized? Debt or Equity?
Debt
This distinction means that debt is prioritized over equity.
Claims on assets and income
What do you call when shares are owned by individual investors or a small group of private investors such as family?
Close
What do you call when shares are actively traded in the stock market and are owned by a mix of public and private investors?
Publicly
What do you call when shares are owned by unrelated individuals or institutional parties?
Widely
Why do ordinary shareholders possess voting rights?
To decide on certain corporate decisions
What are granted to the ordinary shareholders?
Preemptive Right
The palms of the hands are very important in buying or selling stocks. What does it mean when the palms are facing towards the buyer?
Seller wants an offer to buy
The palms of the hands are very important in buying or selling stocks. What does it mean when the palms are facing inwards, towards the buyer?
Buyer searching for a seller
What does it mean when the fist is against the palm?
There’s a stop order
Why is there a stop order?
Because the price has already reached a specific level.
A put is signaled by what?
A hand forming an “OK” sign
A call is signaled by what?
A hand forming letter “C”
This category includes companies that have a market cap of $200 billion or higher.
Mega-cap
This category includes companies that have a market cap below $50 million.
Nano-cap
This category includes companies that have a market cap between $300 million to $2 billion.
Small-cap
What do you call when the investors buy or sell shares by opening an account with a stock broker?
Conventional Brokerage
What do you call the payment when the broker buys and sells shares on behalf of the investor?
Commission
These are investment companies pooling money from various investors and invests them in different securities based on the investment objective.
Mutual Funds
This model generally assumes that investors are prepared to hold the stock for one year.
One-Period Valuation Model
It is an extension of the one-period dividend discount model wherein an investor expects to hold a stock for multiple periods.
Multiple-Period Valuation Model
This model assumes that dividends will be fixed and will not change anymore un the future.
Zero-growth Model
The Gordon Growth Model operates under what four assumptions?
(DGFR)
- Dividends are assumed to grow at a constant rate forever.
- Growth rate is assumed to be lower than the required return.
- First dividend is assumed to be received right away and the next dividend will be received after a year.
- Reasonableness of expectations of investors is important to determine the right share evaluation.
It represents the amount of cash flow from operations available for distribution after accounting for depreciation expenses, taxes, working capital, and investments.
Free Cash Flow to the Firm (FCFF)
Liquidation Value per Share pertains to the actual amount per share that will be received if:
(AAR)
All assets are sold based on their current market value
All liabilities, including preference shares, are fully paid
Remaining proceeds are divided between shareholders
What is known as a trading band?
Static Threshold
It refers to the lowest and highest price limit for each security that the PSE accepts.
Static Threshold
It is the maximum allowable price difference between an update in the Last Traded Price of a given stock or group of stocks against is preceding LTP.
Dynamic Threshold
If the trade frequency qualifier is that it’s traded 20 times or less in the past six months, what’s the security cluster?
A
If the trade frequency qualifier is that it’s traded 500 times or less but greater than 20 times in he past six months, what’s the security cluster?
B
If the trade frequency qualifier is that it’s traded more than 500 times in the past six months, what’s the security cluster?
C
What’s the dynamic threshold for security cluster A?
20%
What’s the dynamic threshold for security cluster B?
15%
What’s the dynamic threshold for security cluster C?
10%
What does Dyn T Low mean?
Minimum threshold
What do you call Dyn T High?
Maximum threshold
Where do corporations, that have an authorized capital stock of at least 500 million, are listed?
Main Board
What are the requirements for companies to be listed under the Main Board?
- Authorized Capital Stock of at least 500 million.
- At least 25% of the authorized capital stock must be subscribed and fully paid
What are the requirements for companies to be listed under the Main Board?
- Authorized Capital Stock of at least 500 million.
- At least 25% of the authorized capital stock must be subscribed and fully paid
