Ch. 1 Series 7 Equity Securities

Assets-liabilities=networth

Over-The-Counter, made up of computer terminals around the US allowing trades to be made.

usually acquired by buying a company's bonds.

a loan to a company in exchange for interest income and the promise to repay the loan at a future maturity date. It does not confer ownership

primary means of raising capital. A company issues stock, each represents an owners right to a share of the company.

Authorized
issued
outstanding
treasury

the amount of stock authorized to issue or sell.

the amount of shares a company has issued but has not repurchased. That is investor owned.

stock that has been repurchased from the public. Corporation can hold stock indefinitely or can reissue or retire it.

the amount a stockholder would expect to receive if the company was liquidated.

the price someone would have to pay to purchase stock from a company.

common stockholders may vote on certain matters related to the corporation in which he holds stock. The amount of stock held determines how much voting power he has.

Allows a stockholder to cast one vote per share owned for each item on a ballot, such as candidates for the BOD. A board candidate needs simple majority to be elected.

Allows stockholders to allocate their total votes in any manner they choose.

a form of absentee ballot. Allows stockholders to vote even if they can't attend a board meeting.

When a company sends proxies to shareholders, usually for a specific meeting.

Securities and Exchange Commission.

The right to maintain the same percentage of stock owned in a corporation if they decide to issue more stock.

When a corporation wants to raise or lower the stock price per share and adjust the price so that stockholders ownership percentage stays the same.

increases the number of shares and and reduce the price.

decreases number of shares and increases price per share.

Selling shares before owning them with the intent of buying them back at a lower price in the future.

an invrease in the market price of shares

a corporation may pay regular dividends to stockholders. Depending on whether the company is profitable the dividends may increase or may stop being paid.

Issuers may also pay stock dividends instead of cash.

has features of equity and debt securities. Preferred stock is an equity security because it represents ownershipo in the corporation. Like a bond it also offers a fixed-income with a fixed-dividend. Receives dividends before common stockholders, also if company goes bankrupt they have priority over common stock.

A key attraction for income-oriented investors.

dividends that are missed cumulate until the company may resume dividend payments plus the ones that were missed to cumulative preferred.

in addition to fixed dividends, participating preferred stock offers its owners a share of corporate profits that remain after all dividends and interest due other securities are paid.

allows the corporation to buy back from investors at a stated price after a specified date. This allows company's to replace higher fixed dividends with a lower one.

If shares are held in street name this means that the shares are held in the brokerage account in the firms name to facilitate payments and delivery.

Current Yield or dividend yield is the annual dividend(normally four times a year) divided by the current market value of the stock.

indicates the shares of a corporation a person owns. The amount of shares listed on the certificate are most likely divisable by 100.

A Committee on Uniform Securities Identification Procedures- A universal security identification number. each issue of stock has one.

Responsible for
1. Ensuring that its securities are issued in the correct owner's name.
2. canceling old and issuing new certificates
3. maintaining records of ownership.
4. handling problems relating to lost, stolen, or destroyed certificates.

Ensures that a corporation does not have more shares outstanding than have been authorized. Also responsible for certifying that a bond represents a legal debt of the issuer. Must be independent of the issuing corporation and is usually a bank or a trust company.

two days before the record date. The ex date is the cut off for someone to qualify someone to receive the dividend.

10 days before the record date, when a corporation declares a divident payment.

On the record date all stockholders on record receive a dividend.

3-4 weeks after the record date a disbursing agent sends dividends via check.

a certificate that represents a short-term privilage to buy additional shares of a corporation.

certificate granting its owner the right to purchase securities from the issuer at a specific price. Usually a long term instrument, giving the investor the choice of buying at a later date.

American Depositary Receipts facilite the trading of foreign stocks in US markets.
ADR's have currency risk

Real Estate Investment Trusts are company's that manage a portfolio of real estate investments in order to earn profits for shareholders. Traded publicly and serve as a source of long-term financing for real estate projects.