sie chapter 2 important Flashcards
Each share represents ___/___ or __%
1/100 or 1% of ownership
common stockholders have the right to
vote for corporate directors
right to limited access to the corporations books(audits on annual basis)
preemptive rights to maintain their proportional share of ownership in the corporation
proxy
absentee ballot for common stockholders if they miss the meeting
capital gains
an increase in market price of securities
used with Investors with long term investment horizon
dividends are declared by
board of directors
market risk
chance that a stock will decline
decreased or no dividend income
chance that dividends will decrease or just stop
low priority at dissolution
preferred stock holders get paid before common stockholders
order for priority with liquidation
IRS(taxes) and employee(unpaid wages) secured debt unsecured liabilities and general creditors subordinated debt preferred stock common stock
preferred share holders rights
no voting rights nor do they have preemptive rights
benefits of owning preferred stock
dividends paid before common shareholders
if corporation goes bankrupt then this applies over common stockholders also
risk of owning preferred stock
purchasing power risk
interest rate sensitivity
decreased or no dividend
paid before common shareholders but everyone else gets priority over preferred in the event of bankruptcy
straight(non cumulative)
missed dividends are not paid
cumulative
accrues payments in the event that their are missed dividend payments
dividends due cumulative stock accumulate where
on the company’s books until the corporation board of directors decides to pay them
callable preferred
Corporations often issue callable (or redeemable) preferred stock, which a company can buy back from investors at a stated price after a speci ed date.
convertible preferred share price tends to
fluctuate in line with the common.
adjustable rate preferred
adjustable dividend rates
Such dividends are usually tied to the rates of other interest rate benchmarks, such as Treasury bills and money market rates, and can be adjusted as often as quarterly.
for investors looking for income through preferred stock, which would be their least appropriate
adjustable preferred
participating preferred
In addition to fixed dividends, participating preferred stock offers its owners a share of corporate pro ts that remain after all dividends and interest due other securities are paid.
control securities
are those owned by directors, of officers, or persons who own or control 10% or more of the issuer’s voting stock.
if one person holds 5% of the voting stock and their wife owns another 5% of the voting stock, then are they a control person or not
they are
restricted securities
are those acquired through some means other than a registered pub- lic offering.
rule 144
SEC rule requiring that persons who hold control
or restricted securities sell them only in limited quanti- ties, and that all sales of restricted stock by control per- sons must be reported to the SEC by filing a Form 144,