Equity Securities

Question 1

Reverse Stock Split

Answer 1

Decrease number of shares and increase the price per share

Question 2

Capital Appreciation

Answer 2

Increase in the market price of shares (growth)

Question 3

Common Stock Values

Answer 3

1. Par value
2. Book value
3. Market value

Question 4

Common Stock (phases)

Answer 4

1. Authorized
2. Issued
3. Treasury stock
   4 Outstanding

Question 5

Market Value is influenced by

Answer 5

1. Supply: Number of shares available to investors

2. Demand: Shares investors want to buy

Question 6

Security

Answer 6

Investment that represents either an ownership stake or a debt stake in a company.

Question 7

Cumulative voting

Answer 7

Allows shareholders to allocate total votes in any manner they chose (benefits smaller investor)

Question 8

Issued - Common stock (phases)

Answer 8

Stocks authorized and distributed to investors

Question 10

Statutory Voting

Answer 10

Allows stockholders to cast one vote per share owned for each item on the ballot (benefits larger shareholders)

Question 11

Individual stock ownership

Answer 11

Represents his/her proportionate interest in a company

Question 12

Forward Stock Split

Answer 12

Increases number of shares and reduces the price

Percentage decrease win price will always be less then percentage increase in shares

Question 13

Limited Liability

Answer 13

Protects stockholders from having to pay a corporations debts in bankruptcy

Question 14

Treasury - Common stock (phases)

Answer 14

Stock issued and repurchased from the public

[Issued - Treasury = Outstanding]

Question 15

Order in which dates involving dividend distributions occur

Answer 15

Declaration, Ex-date, Record, Payable

• Declaration, record and payable determined by BoD
• *Ex-date determined by FINRA or the exchange

Question 16

Bonds

Answer 16

A loan to a company (debt)

Question 17

Corporations issue two types of stock

Answer 17

1. Common stock

2. Preferred stock

Question 18

Stock

Answer 18

Represents equity or ownership in a company

Question 19

Most Junior Security

Answer 19

Common stock: Last in line during a corporate liquidation

Question 20

Par Value - Common Stocks

Answer 20

Dollar amount assigned to a share of stock by its issuer

Question 21

Authorized - Common stock (phases)

Answer 21

Specific number of shares company is authorized to issue or sell

Question 23

Outstanding - Common stock (phases)

Answer 23

Any shares company issued/not repurchased (Investor owned stock)

Question 23

Book Value - Common Stocks

Answer 23

Liquidation value of each share of common stock

Question 23

Preemptive Rights

Answer 23

Give investors the right to maintain a proportionate interest in a company’s stock

Question 24

Market Value - Common Stocks

Answer 24

Supply and demand value

Question 26

Market Price

Answer 26

Price investors must pay to buy stocks

Question 27

Debt Instrument

Answer 27

Loan to a company in exchange for interest income and the promise to repay the loan at a future maturity date (does not confer ownership)

Question 27

Senior Securities

Answer 27

Bonds and preferred stocks during company bankruptcy

Question 28

Warrant

Answer 28

Certificate granting its owner the right to purchase securities from the issuer at specified price as of the date of issue of the warrant