Equity Securities Flashcards

1
Q

What’s another word for Equity

A

Ownership

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2
Q

Common Stock

A

Mostly Bought for Growth

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3
Q

Preferred Stock

A

Mostly Bought for Income

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4
Q

ADR’s

A

American Depository Receipt

A US Security that represents a foreign security

-A US Domestic Security Issued and Regulated in the US
-Used to facilitate the trading of foreign securities
-2 types of Risk:
a) Currency Risk
b) Market Risk

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5
Q

Restricted Stock

A

May come from 2 different Places:
1) Private Placements (define this as well)
2) Employee Stock Plans (define this as well)

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6
Q

Voting Rights

A
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7
Q

Dividends

A

good for investors who have:
-Long Time Horizon
-Have a higher Risk Tolerance
-Seeking Income

Dividends can be quarterly, annually, semiannually or whenever and are no set in stone or guaranteed to be paid to the shareholders

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8
Q

Pre-emptive Rights

A

The right not to be Diluted
(not to lose your overall percentage of the company)

Pre-emptive rights, also known as subscription rights or rights of first refusal, refer to the right of existing shareholders to maintain their proportional ownership in a company by purchasing newly issued shares before they are made available to the public.

it is important to understand that pre-emptive rights are an important consideration for investors when a company decides to issue additional shares of stock. This is because the issuance of new shares can dilute the value of existing shares, which can negatively impact shareholder returns.

Investors with pre-emptive rights have the option to purchase the new shares at a discount or at the current market price before they are made available to the public. This can help to mitigate the potential dilution of existing shares and maintain the investor’s proportional ownership in the company.

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