Equity Securities Flashcards
Reverse Stock Split
Decrease number of shares and increase the price per share
Capital Appreciation
Increase in the market price of shares (growth)
Common Stock Values
- Par value
- Book value
- Market value
Common Stock (phases)
- Authorized
- Issued
- Treasury stock
4 Outstanding
Market Value is influenced by
- Supply: Number of shares available to investors
2. Demand: Shares investors want to buy
Security
Investment that represents either an ownership stake or a debt stake in a company.
Cumulative voting
Allows shareholders to allocate total votes in any manner they chose (benefits smaller investor)
Issued - Common stock (phases)
Stocks authorized and distributed to investors
Statutory Voting
Allows stockholders to cast one vote per share owned for each item on the ballot (benefits larger shareholders)
Individual stock ownership
Represents his/her proportionate interest in a company
Forward Stock Split
Increases number of shares and reduces the price
Percentage decrease win price will always be less then percentage increase in shares
Limited Liability
Protects stockholders from having to pay a corporations debts in bankruptcy
Treasury - Common stock (phases)
Stock issued and repurchased from the public
[Issued - Treasury = Outstanding]
Order in which dates involving dividend distributions occur
Declaration, Ex-date, Record, Payable
- Declaration, record and payable determined by BoD
- *Ex-date determined by FINRA or the exchange
Bonds
A loan to a company (debt)
Corporations issue two types of stock
- Common stock
2. Preferred stock
Stock
Represents equity or ownership in a company
Most Junior Security
Common stock: Last in line during a corporate liquidation
Par Value - Common Stocks
Dollar amount assigned to a share of stock by its issuer
Authorized - Common stock (phases)
Specific number of shares company is authorized to issue or sell
Outstanding - Common stock (phases)
Any shares company issued/not repurchased (Investor owned stock)
Book Value - Common Stocks
Liquidation value of each share of common stock
Preemptive Rights
Give investors the right to maintain a proportionate interest in a company’s stock
Market Value - Common Stocks
Supply and demand value
Market Price
Price investors must pay to buy stocks
Debt Instrument
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)
Senior Securities
Bonds and preferred stocks during company bankruptcy
Warrant
Certificate granting its owner the right to purchase securities from the issuer at specified price as of the date of issue of the warrant
