Using Securities Markets for Financing and Investing Opportunities (19 L.S.) Flashcards
What is the first public offering of a corporation’s stock?
Initial public offering (IPO)
____ involves buying several different types of investments to spread the risk of investing.
Diversification
Preferred stockholders are given preference over common stockholders in:
- The payment of dividends
- The claim on company assets
List the steps in investing in stocks and bonds in order.
1-decide what stock/bond to invest in
2- find a stockbroker
3- the stockbroker negotiates a price and places an order
4- the trade is reported to your broker, who then notifies you
Type of specialist assists in the issue and sale of new securities…
Investment Bankers
Stocks of corporations in emerging fields such as technology and biotechnology or Internet-related firms, whose earnings are expected to grow at a faster rate than other stocks, are referred to as ____ stocks.
Growth Stocks
Institutional investors are large organizations such as pension funds, mutual funds, and insurance companies that…
invest in their own funds or the funds of others
Bonds that are not backed by any collateral such as equipment are called ____ bonds.
Debenture bonds
The members of a stock exchange such as the NYSE…
-Buy and sell securities for companies and individuals
A(n) ____ order tells the broker to buy or sell a stock at specific price, if that price becomes available.
limit order
Securities that are not traded on registered stock exchanges are traded on…
over-the-counter (OTC) market
An action by a company that gives stockholders two or more shares of stock for each one they own is called a(n) ___ ___.
Stock Split
Buying stock on margin
Purchasing stocks by borrowing some of the purchase cost from the brokerage firm
Propectus
- is a condensed version of the registration statement
- it must be sent to prospective investors
Share of ownership in a company are called
Stocks
The positive difference between the purchase price of a stock and its sale price is called ___ ____.
Capital gain
What are stocks of public utilities that usually offer investors a high dividend yield that generally keeps pace with inflation?
Income stocks
The ____ is a telecommunication network that links dealers across the nation, so that they can buy and sell securities electronically rather than in person.
NASDAQ
Cash payments or additional shares of stock that are distributed to stockholders from corporate profits are called…
Dividends
A(n) ____ fund buys stocks and bonds and then sells shares in those securities to the public.
Mutual Fund
What is the payment that the issuer of the bond makes to the bondholders for use of the borrowed money?
Intrest
The exact date the issuer of a bond must pay the principal to the bondholder is called the ___ ___.
maturity date
The Dow Jones Industrial Average is the average cost of ____ selected industrial stocks.
30
What is provided in a STOCK QUOTE?
- The highest and lowest price the stock traded for that day
- The stock’s high and low over the past 52 weeks
- The dividend paid (if any)
- The stock’s dividend yield
- imported ratios like the price/earnings ratio
- Earnings per share
The primary purpose of a SINKING FUND is to…
ensure that enough money will be available to repay bondholders on the bond’s maturity date.
What type of stock is the most basic form of ownership in a firm?
Common Stock
Advantages of ISSUING BONDS:
- Bondholders are creditors of the firm, not owners.
- Bond interest is a business expense and tax-deductible to the firm
- Bonds are a temporary source of funding
- Bonds can be repaid before the maturity date if they are callable
Bonds that is high-risk, high-interest
Junk Bonds
Bonds can range from the highest quality to ___ bonds.
Junk bonds
Exchange-traded funds are collections of stocks, bonds and other investments that are….
traded more like individual stocks than like mutual funds
A(n) ____ order tells a broker to buy or to sell a stock immediately at the best price available.
Market order
Evidence of stock ownership that specifies the name of the company, the number of shares it represents, and the type of stock being issued is called a(n) ___ certificate.
Stock certificate
The ___ and ___ Commissions is the federal agency that has responsibility for regulating the various stock exchanges.
Securities and Exchange Commission (SEC)
A(n) ____ is a registered representative who works as a market intermediary to buy and sell securities for clients.
Stockbroker
Preferred stock differs from common stock as it…
- Pays a fixed dividend
- Pays dividends to preferred stockholders first
- Does not usually have voting rights
The SEC was created by..
The Securities and Exchange Act of 1934
Giving instructions to computers to automatically sell if the price of a stock dips to a certain point to avoid potential losses is called ____ trading.
Program trading
A corporate certificate indicating that an investor has lent money to a firm is called a(n)…
Bond certificate
Young or new investors may be advised to diversify by purchasing shares in mutual funds or a variety of…
Index funds
A STOCK CERTIFICATE contains…
- the name of the company
- number of shares owned
- the type of stock it represents
_____ stock is identified by the letters “pf” on a stock quote.
Preferred Stock
How do independent rating firms such as Standard & Poor’s and Moody’s Investors Service rate bonds?
Degree of risk
