Vocabulary Flashcards
Common Stock
equity ownership in a corporation
Preferred Stock
represents equity ownership in a corporation but usually does not have the same voting rights or appreciation potential as common stock.
- just as with debt securities, the rate of return on a preferred stock is fixed rather than subject to variation as with common stock
- does not have the same growth potential as common stock
Capital Appreciation
An increase in the market price of securities
Proxy
An absentee ballot
-they have the right to sell or give away their shares without the permission of the corporation
Cumulative Preferred Stock
accrues payments due its shareholders in the event dividends are reduced or suspended
Callable (or redeemable) Preferred
when a company can buy back from investors at a stated price after a specified date
Convertible
if the owner of a preferred stock can exchange the shares for a fixed number of shares of common stock of the issuing coporation
American Depository Receipts (ADR)
A negotiable security that represents a receipt for shares of stock in a non US. Corporation, usually from 1-10 shares
Currency Risk
the possibility that an investment denominated in one currency could decline if the value of that currency declines in its exchange rate with the U.S. dollar
Emerging Markets
markets in lesser developed countries
-low levels of income, low levels of equity capitalization,questionable market liquidity, potential restrictions on currency conversion, high volatility, prospects for economic growth and development,
Developed Markets
markets associated with countries that have highly developed economies with stable political and social institutions
-large levels of equity capitalization, low commission rates, few if any currency conversion restrictions, highly liquid markets
Country Risks
a composite of all the risks of investing in a particular country
Real Estate Investment Trust (REIT)
a company that manages a portfolio of real estate investments to earn profits for shareholders.
- normally publicly traded, and serve as a source of long term financing for real estate projects
- trades on exchanges and otc, not mutual funds, an owner holds undivided interest in a pool o real estate investments
Equity REITS
own commercial property
Mortgage REITs
own mortgages on commercial property
Hybrid REITS
both commercial properties and mortgages on commercial properties
Preemptive Rights
entitle existing common stockholders to maintain their proportionate ownership shares in a company by buying newly issued shares before the company offers them to the general public
Rights Offering
allows stockholders to purchase common stock below the current market price
Warrant
a certificate granting its owner the right to purchase securities from the issuer at a specified price, normally higher than the current market price
Bond
certificate representing the corporation’s indebtedness.
-for taxation purposes, all corporate bond interest is fully taxable as ordinary income on both federal and state tax returns
Municipal Bonds
Bonds issued from state and local political entities
-a security issued by a state or other municipality
Secured Debt Securities
securities that are backed by various kinds of assets of the issuing corporation
Unsecured Debt Securities
securities that are backed only by the reputation, credit record, and financial stability of the corporation
Guaranteed Bond
a bond that is guaranteed as to payment of interest, or both principal and interest, by a corporate entity other than the issuer
