Part 1 Flashcards
Define a security
An intangible financial asset that may be bought, sold, or gifted between persons. It may be represented by a paper certificate of held in an electronic record.
What is the difference between a commodity and a security?
Securities are a financial asset. A commodity is a hard asset like gold, beef, oil, etc.
Are “futures” commodities or security? Why?
They are a commodity… (more info to come).
What is the legal daefinition of a security? What test is used to determine a security?
- An investment of money made into
- A common enterprise
- With the expectation of profit
- Through the efforts of a third party.
Test used: Howey test. Comes from SEC VS. W.J Howey co. Case.
Names examples of a security:
(name examples of things that are not securities):
Stocks, bonds, notes, and debentures (all types of debt), options, mutual funds, jumbo CDs, depositary receipts, units in am investment, variable annuities.
Not securities: cash and currency, fixed annuities, life insurance (whoe and term).
Are cryptocurrencies a commodity or security?
Up for debate but the SEC see them as a commodity and not a securitiy. (meets the requirement for a security but there is no third party management).
What is a divdend?
A sum of money paid regularly (typically quarterly) by a company to its shareholders out of its profits (or reserves). still working on this definition
What are stockholders or shareholders?
Investors who buy the stock. They buy a share of ownership in the company. ( look for an example of this in page 6.)
Common stock can be classified as:
- Authorized
- Issued
- Outstanding
- Treasury
Define authorized stock
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Define issued stock
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Dife outstanding stock
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Define Treasury Stock
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How are common stocks classfied? What are they? (hint theres 3).
Define Large Cap stocks
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