Understanding Products And Their Risks Flashcards
Price at which a convertible bond or other convertible security can be exchanged for common stock
Conversion price
Formula that determines the number of shares of common stock that will be received in exchange for each convertible bond or preferred stock during a conversion
Conversion ratio
Unsecured bonds backed only by the general credit of the issuer rather than a specific lien on a particular assets
Debentures
Loan obligation that enable companies to raise capital with an agreement to repay the lender according to the terms of a contract; examples include notes and bonds
Debt instruments
Portion of a corporations profits paid to shareholders
Dividend
The value of an asset calculated by taking the difference between the price paid for the asset and its market price
Goodwill
Nonphysical assets
Intangibles
The use of borrowed money to increase the potential return of an investment
Leverage instruments
A company’s financial obligations such as money owed to lenders suppliers and employees
Liability
The process by which a company sells its assets to dissolve the business
Liquidation
An investors authority to exercise the right to vote on his or her own shares; alternatively the investor can allow another party to vote the shares on his or her behalf
Proxy
Price of a new issue of securities at the time the issue is offered to the public
Public offering price (POP)
A corporations cumulative earning that have not been distributed to its shareholders
Retained earnings
Price at which the current shareholders of a firm are authorized to buy its common stock in a rights issue
Subscription price
