Equity Securities

Question 1

A type of equity viewed as a hybrid security because some of its characteristics are debt like and other are more like equity. Typically do not have voting rights

Answer 1

Preferred Stock

Question 2

Cash that is left over after business operations and taxes are paid

Answer 2

Free Cash Flows

Question 3

An estimate of a stock’s return over a certain period of time. Typically ignores time value of money

Answer 3

Holding Period Return

Question 4

An economic model to compute the value of a stock assuming the stock will have constant divided growth

Answer 4

Gordon Growth Model

Question 5

An asset which earns its return after fixed-income assets are paid. This means that the holder will get “whatever is left over”

Answer 5

Residual Claim

Question 6

Often another name for stock

Answer 6

Equity

Question 7

A type of equity which usually has voting rights. These holders are last in line to receive their money back in the event of bankruptcy

Answer 7

Common Stock

Question 8

A form of compensation where the employee is paid with these

Answer 8

Company Stock Options

Question 9

Represents equity or ownership in a firm

Answer 9

Common Stock

Question 10

The structure, rules, and regulations for owners and managers of a firm

Answer 10

Corporate Governance

Question 11

Unlike debt, stock has no

Answer 11

Maturity or Expiration Date

Question 12

The unlimited earnings potential of equity ownership

Answer 12

Upside

Question 13

The value of an asset computed with an economic model.

Answer 13

Intrinsic Value

Question 14

Securities that are not fixed income securities

Answer 14

Variable-Return Securities

Question 15

Another name for fixed-income securities. These are typically debt instruments, such as a bond

Answer 15

Fixed-Return Securities

Question 16

A security that has characteristics like stock and bonds - an example could be preferred stock

Answer 16

Hybrid Security

Question 17

A preferred stock characteristic where common stock dividends cannot be paid until the preferred dividends are paid

Answer 17

Dividend in Arrears

Question 18

An economic model to compute the value of equity assuming two growth rates

Answer 18

Two-Stage Model

Question 19

An economic model to compute the value of equity assuming multiple growth rates

Answer 19

Multi-Stage Growth Models

Question 20

Firms that are expected to experience high growth

Answer 20

High-Growth Firms