Lesson 1.2 Flashcards
Name the 4 common stock classes for a corporation.
Authoried
Outstanding
Issued
Treasury
What is a corporation?
A legal being just like a real person. Corps are formed thru the preparation of a corporate charter. Corps can do the same things as a natural person plus they can raise money by issuing securities.
What is a corporate charter?
Specifies the # of shares the company is authorized to issue. This decision is made by the founders of the business.
Authorized Shares
The # of shares the founders of the business say the corp is authorized to issue.
Note: in most cases the corp does not issue all the authorized shares. It issues enough to raise the capital that is needed. Authorized unissued stock is not considered in determining a company’s total capitalization.
Issued Stock
Authorized stock sold to investors.
Outstanding Stock
Any shares that a company issued and is in the hands of investors. If the company buys the stock back or the shareholder gifts it back to the company, it is no longer outstanding stock.
Treasury Stock
Stock a company issued and reaquired. Company can hold the stock indefinitely, reissue or retire it. Analysts are not concerned with these shares.
Name the 4 types of common stock.
Large-Cap Stock
Mid-Cap Stock
Small-Cap Stock
Penny-Cap Stock
Large cap stock
Stock from large companies, big and long established. Most people have heard of a long histort of steady dividend payments. Called Blue Chip stocks
Mid cap stocks
Not as large as large cap companies but too big to be small cap.have some large and small cap traits.
Small cap stocks
Small but big emough to be listed on the national exchange. Oriented towards growth, pay very little in dividends.
Penny stock
Unlisted, not on US stock exchabge. Trade for less than $5 a share. Penny stocks are Highly Speculative!
