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23 Cards in this Set
- Front
- Back
Common stock
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-ownership in a corportation
-1 vote per stock -riskier than preferred, and bonds |
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common shareholders may elect
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members of the board of directers
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members of the board of directors can be elected by _____ voting or _____voting
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cumulative voting
straight voting |
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preferred stockholders have a ___ claim on earnings and assets compared to common stockholders
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prior Or Preferred
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cumulative
-part of preferred stock- |
arrearage (overdue) plus current dividends paid before any payment is made to common stockholders
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Non-participating
-part of preferred stock- |
preferred receive a fixed level of dividends, thus not participating in possible high earnings level of the corportation
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Adjustable rate
-part of preferred stock- |
preferred, indexed to market rates vary as the index varies
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preferred stockholders and voting
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they are usually excluded from voting for board of directors and shareholder issues
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many corporations buy ____ stock
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preferred
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the largest holder of equity
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households
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convertible preferred stock
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convertible to common stock at specific common price or number of shares (conversion ratio)
-dividents received until conversion |
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convertible bonds
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convertible to common stock at specific common price or number of shares
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convertible bonds are mostly _____ debt and hence have a ______ risk
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subordinated
higher |
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initial public offering (IPO)
or unseasoned offering |
the first time shares are sold in the market.
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equities may be sold ___ to the investors by the _____
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directly
firm |
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equties may be sold to existing shareholders in a ___ ____
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rights offering
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in the secondary market for equity securities, stocks may trade on :
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exchanges or over the counter
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secondary market for equity securities provides:
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investor liquidity
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stable prices are related to the extent of
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- breadth
- depth -resiliency |
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breadth of the market
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number of varied traders of the stock
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depth of the market
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extent to which there are conditional orders to buy and sell below and above the current price, respectively
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resiliency of the market
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the ability of the market to attract buyer/sellers when the stock prices decreases/increases, respectively.
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secondary markets bring buyers/sellers together in 4 ways
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1) direct search- a buyer may incur search costs and find a seller on their own
2) a broker may bring buyer and seller together, charging a commission 3) a dealer may sell/buy (bid/ask) securities from an inventory of securities, reducing search costs. The dealers return is the bid/ask spread. 4) an auction market allocates the selling shares to the highest bidder, providing a buyer/seller. |