Unit 1 - Equities

Question 1

define participating preferred stock

Answer 1

preferred stock that offers the corporate profits that remains after the dividends are paid

Question 2

Calculation of preferred yield

Answer 2

div / price of pfd stock

Question 3

Define cumulative preferred stock

Answer 3

holders receive accumulated dividends before the stock holders + their preferred amount

Question 4

define the registrar

Answer 4

it is a state entity that works separately from the transfer agent

Question 5

define special handling in a dividend distribution

Answer 5

when 25% or more of the shares outstanding is a dividend

Question 6

define a due bill

Answer 6

“printed statement showing the owner’s right to the dividend”

Question 7

define preemptive rights

Answer 7

shows the buyers rights to own a proportionate amount of the company before it goes public

Question 8

define a rights offering

Answer 8

allows stockholders to purchase the public stock below the current market value

Question 9

define a subscription right

Answer 9

a short right (usually 30-45 days) to buy additional shares of a corporation. one right per share

Question 10

define standby underwriting

Answer 10

purchaser of all unsold shares from the issuer and sells them to the public

Question 11

define a warrant

Answer 11

certificate granting ownership of add’l shares at usually higher than current market value from the issuer. no voting rights. typically longer than rights (up to 5 years to perpetuity)

Question 12

define ADRs (American Depository Receipts)

Answer 12

negotiable security that represents receipt of stock of a non U.S. company