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FINANCIAL MARKETS > THE STOCK MARKET > Flashcards

THE STOCK MARKET Flashcards

1
Q

Can participate through voting on specific decisions like board of directors

A

EQUITY

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2
Q

Does not participate

A

Debt

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3
Q

Subordinate to debt

A

Equity

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4
Q

Prioritized over equity

A

Debt

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5
Q

Least priority in terms of assets and income distribution

A

Equity

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6
Q

Claim of creditors are satisfied before distributing to shareholders

A

Debt

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7
Q

Type of Financing: Permanent

A

Equity

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8
Q

Type of Financing: Temporary

A

Debt

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9
Q

No Maturity Date

A

Equity

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10
Q

Maturity date is based on what is stipulated in contract

A

Debt

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11
Q

Higher risk; investors expect higher returns (through infinite capital appreciation)

A

Equity

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12
Q

Lesser risk; return is limited to interest stipulated in agreement

A

Debt

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13
Q

Cannot be claimed as tax-deductible expense by company

A

Equity

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14
Q

Tax-deductible expense for company

A

Debt

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15
Q

funds provided by the firm’s owners (investor or stockholder)

A

Equity

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16
Q

portion in the statement of financial position which is the residual value of the company after deducting the liabilities from the assets

A

Equity

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17
Q

the maximum amount of shares that is legally allowed to be issued
cannot be issued additional shares until it files amendment

A

Authorized Capital Stock

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18
Q

the total amount of shares held by the shareholders

A

Outstanding Shares

19
Q

shares that are repurchase or bought back by the company from its shareholders

A

Treasury Shares

20
Q

shares that were issued by the company, whether outstanding or treasury shares

A

Issued Shares

21
Q

the rise in the value of an asset in relation to increase in its market price
since shares can be sold in secondary market, investors may sell shares they originally bought

A

Capital Appreciation

22
Q

payments made by corporations to shareholders representing the earning of the company
usually paid in quarterly, and some pays semi or annually
can be in form of cash, property, or own shares
based on current performance of the business

A

Dividends

23
Q

have distinct rights to be prioritized in terms of liquidation

A

Preference Shares

24
Q

has fixed periodic dividend payments

A

Preference Shares

25
Q

treated as quasi-debt where dividends associated with the shares are like interest payments on debt

A

Preference Shares

26
Q

dividends in arrears and the current dividend should be paid to preference shareholders before paying the ordinary shareholders

A

Cumulative

27
Q

retire or repurchase outstanding shares within a predetermined period of a time at a specified price

A

Callable

28
Q

convert the preference shares to a stated number of ordinary shares after a certain date

A

Convertible

29
Q

represent the true ownership of the corporation which is called the residual value to be received by the common stock shareholders after all claims of creditors and preference shareholders on the net assets are satisfied

A

Ordinary Shares

30
Q

T/F: Dividends are guaranteed unlike preference shareholders.

A

FALSE, not guaranteed

31
Q

T/F: Ordinary shareholders have limited liability where their obligation is up to the amount they have invested.

A

TRUE

32
Q

T/F: High returns in terms of dividends when the company is earning.

A

TRUE

33
Q

T/F: Two share is equivalent to one vote.

A

FALSE, one share only

34
Q

T/F: Has pre-emptive rights where ordinary shareholders are not permitted to retain their proportionate share in the company

A

FALSE, it is permitted

35
Q

instruments issued by companies to provide shareholders with the opportunity to preserve their fraction of corporate ownership

A

Stock Rights

36
Q

financial instrument which permits shareholders to buy additional shares from the company in direct proportion to the shares they own

A

Stock Rights

37
Q

long-term instruments that also allow shareholders to purchase additional shares of stock.

A

Warrants

38
Q

offered in conjunction with fixed income securities and act as a “sweetener”, or financial enticement to purchase a bond or preferred stock

A

Warrants

39
Q

composed of exchanges and over the counters where the shares are issued and traded publicly

A

Stock Market

40
Q

________ where shares are purchased and sold face to face in a trading floor is called a __________

A

physical site, stock exchange

41
Q

refers to the market wherein shares can be traded by dealers that are connected electronically by computers

A

over the counter market

42
Q

T/F: The overall performance of stock market is measured through stock market indexes which represents the average of stock prices currently being traded.

A

TRUE

43
Q

T/F: Investors use stock market indexes to gain some insight on how a group of stocks could have performed in the market.

A

TRUE

FINANCIAL MARKETS (5 decks)

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