Equity Markets and Primary Markets Flashcards
Primary stock markets allow suppliers of funds to raise ______
Equity capital
What market is the most closely watched and reported of all financial markets?
Secondary Markets
Who
- Has a right to share in the firms profits
- Are residual claimants
- Have limited liability
- Have voting rights?
- Are the legal owner’s of a corporation
Shareholders
What is the fundamental ownership claim in a public or private corporation?
Common Stock
Do common stockholder’s have voting rights?
Yes
_____ voting is the number of votes assigned to each stockholder equals the number of shares held multiplied by the number of directors to be elected?
Cumulative
_____ voting allows stockholder’s to vote by an absentee ballot.
Proxy
___ ____ is a hybrid security that has characteristics of both bonds and common stock
Preferred stock
When are fixed dividends usually paid?
Quarterly
Do Preferred stockholders have voting rights?
No
What is the difference between cumulative and noncumulative in preferred stock?
Cumulative dividends you have to add up and pay all to preferred stock before you can pay common stockholders. Noncumulative dividends you do not have to.
What is the difference in nonparticipating and participating?
Nonparticipating - getting the same amount regardless of whether the company does good or not.
Participating - When you are rewarded based upon the company doing well
Why go public?
- Can raise a lot of money
- Not held liable by a bank if the company does bad
- Allows for an easier time getting loans
- Shareholder monitoring benefits – make sure the company is upholding moral standards
- Brand awareness
What is an IPO?
Initial public offering – first public issue of financial instruments by a firm
What is prospectus?
A long list of reasons why you shouldn’t invest in a company
