Equity Securities Flashcards
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
Preferred Stock
Cash that is left over after business operations and taxes are paid
Free Cash Flows
An estimate of a stock’s return over a certain period of time. Typically ignores time value of money
Holding Period Return
An economic model to compute the value of a stock assuming the stock will have constant divided growth
Gordon Growth Model
An asset which earns its return after fixed-income assets are paid. This means that the holder will get “whatever is left over”
Residual Claim
Often another name for stock
Equity
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
Common Stock
A form of compensation where the employee is paid with these
Company Stock Options
Represents equity or ownership in a firm
Common Stock
The structure, rules, and regulations for owners and managers of a firm
Corporate Governance
Unlike debt, stock has no
Maturity or Expiration Date
The unlimited earnings potential of equity ownership
Upside
The value of an asset computed with an economic model.
Intrinsic Value
Securities that are not fixed income securities
Variable-Return Securities
Another name for fixed-income securities. These are typically debt instruments, such as a bond
Fixed-Return Securities
A security that has characteristics like stock and bonds - an example could be preferred stock
Hybrid Security
A preferred stock characteristic where common stock dividends cannot be paid until the preferred dividends are paid
Dividend in Arrears
An economic model to compute the value of equity assuming two growth rates
Two-Stage Model
An economic model to compute the value of equity assuming multiple growth rates
Multi-Stage Growth Models
Firms that are expected to experience high growth
High-Growth Firms
