Securities Flashcards
American Depositary Receipts
Facilitate US citizens owning foreign shares.
Foreign shares held by bank.
ADR is US security traded in US markets (quoted in US dollars).
Dividends declared in foreign currency but paid in US dollars (currency risk).
REITS
Traded on exchanges or OTC.
Provide liquidity.
75% of assets must be invested in operating income producing real estate or mortgages to qualify as a REIT.
Rights
Available to existing shareholders.
Short term (30-45 days).
When issued exercise price is below CMV (allows purchase at a discount).
Not marginable.
Warrants
Offered with other securities as “sweeteners”.
Sold as units
Preferred shares
Fixed par value
Dividends are fixed stated rate
Straight (noncumulative)
Missed dividends are not payable
Cumulative
Missed dividend (dividends in arrears and current preferred dividend must be paid before common).
Callable
Issuer may buy back shares after a specified date at a specified price.
Participating
Issuer may pay more than stated dividend
Adjustable rate
Dividend tied to another rate
Stock dividend adjustment
Price of stock adjusts down for dividend
Investor receives addition shares
Aggregate value remains the same
Taxable when shares are sold
Cash dividend
Price of stock adjusts down by the amount of dividend on the ex-dividend date
Taxable when received
Declaration date
Determined by the BOD
Date dividend is declared
Ex-dividend date
Determined by FINRA or SRO
2 business days before record date
Record date
Determined by BOD
Date trade must settle by for buyer to receive current dividend
Payable date
Determined by BOD
Date dividend is distributed
Outstanding shares
Issued shares - Treasury shares
Treasury shares
Issued shares - outstanding shares
Dividends payable as
Cash, stock, or property
Dividend (current) yield
Annual dividend/ current market value
Conversion Ratio
Par/Conversion price
Parity price of common
Market price of bond/conversion ratio
Parity price of bond
Conversion ratio * common stock price
Coupon, nominal, or stated yield
Annual interest/par value
Callable bonds
Issuer can buy back bonds as of a specified date prior to maturity at a specified price
Issuer will call bonds in anticipation of current interest rates falling
Allows issuer to lower the cost of borrowing
Facilitates “refunding”; replacing one issuer with another at a lower net interest cost to the issuer.
