Investing in corporation

Question 1

Stock definition

Answer 1

Ownership represented by SHARES

Carries voting attributes and

Question 2

How is ownership of stocks demonstrated?

Answer 2

Traditionally: physical stock certificates

Today: ELECTRONIC ownership

Question 3

Corporate creditors + what they are owed

Answer 3

hold debt of corporation

are entitled ONLY to repayment of loan + interest

Question 4

Corporate stockholders and what they are owed

Answer 4

Entitled to ALL VALUE that REMAINS in corp after debts have been paid

Question 5

What is preferred stock?

Answer 5

Has PREFERENCE over common stock in relation to DIVIDENDS (payments to shareholders) and LIQUIDATION

Question 6

Secured creditor vs. preferred shareholder: who has priority in liquidation?

Answer 6

SECURED CREDITOR

Question 7

Do most corporations have multiple classes of stock?

Answer 7

NO, most just have one class, but can have as many as they want with different voting/economic rights