1.3 Common Stock

Question 1

An equity investor can make money by?

Answer 1

Buying low and selling high

Question 2

Capital gain / appreciation

Answer 2

A gain in the original capital invested

Question 3

Dividends

Answer 3

Cash or stock paid to shareholders for each chair that they own

Question 4

Our company is required to pay dividends yes or no?

Answer 4

No

Companies are not required to pay dividends

Question 5

Share prices are determined by?

Answer 5

Supply and demand

Question 6

Most corporations issue what kind of stock?

Answer 6

Common stock

Question 7

More shares equal more?

Answer 7

Ownership

Question 8

Treasury shares / Treasury stock

Answer 8

Shares that have been issued but are not owned by investors instead they are owned by the company

Question 9

Treasury shares have NO _______ rights

And Pay NO ______________

Answer 9

Rights

Dividends

Question 10

Shares outstanding

Answer 10

Stock remaining in circulation, after an issuer re-purchases shares removing them from circulation

Question 11

How to find the amount of shares outstanding?

Answer 11

Issued shares - treasury shares

Question 12

MARKET CAPITALIZATION

Answer 12

Share price x shares outstanding

Question 13

Treasury shares are not included in…

Answer 13

Shares outstanding

Question 14

Who buys and sells securities out of its own inventory?

Answer 14

Dealer

Question 15

What market is it win an investor cells to another investor

Answer 15

Secondary

Question 16

The first time in issue or sell shares to the public

Answer 16

Initial public offering (IPO)

Question 17

The investment bank that helps an issue or sell it securities is known as

Answer 17

Underwriter

Question 18

This person acts as a go-between for a buyer and seller in the secondary market

Answer 18

Broker

Question 19

Shares that have been re-purchased by the company and removed from public circulation are?

Answer 19

Treasury shares

Question 20

Common stock shareholders rights

Answer 20

Right to inspect records

Right to vote on relevant matters

Right to receive dividends

Right of limited liability

Transfer right

Preemptive rights

Right to sue for wrongful acts

Question 21

Par value of common stock

Answer 21

For investors in common stock, the par value of a share is set arbitrarily

Question 22

Physical certificate

Answer 22

Registered in owners name

Question 23

Street name registration

Answer 23

Registered on the issuers books in the name of the owners brokerage firm

“ Book entry form”

Beneficial rights to ownership

Belong to the customer not the brokerage firm

Question 24

Direct registration system (DRS)

Answer 24

Owners get the benefits of direct ownership by receiving reports, dividends and proxies directly from the issuer

Question 25

The Registrar

Answer 25

Make sure the company always has the proper number of shares outstanding

Question 26

The registrar monitors and...

Answer 26

audits the transfer agent

Question 27

Registrars are

Answer 27

usually banks

Question 28

Penny stocks are

Answer 28

Low priced equity securities that are not actively traded Usually below $5

Question 29

Investing in penny stocks can be

Answer 29

RISKY

Question 30

Penny stocks are usually quoted on one of two over the counter quotation systems which are?

Answer 30

Over the counter bulletin board (OTCBB) OTC Link

Question 31

Customers must be given what prior to their first penny stock transaction?

Answer 31

A risk disclosure document

Question 32

The broker dealer must provide what to the customer for the penny stock?

Answer 32

The current market bid and offer

Question 33

Before selling a penny stock to a new customer, a broker dealer must conduct a?

Answer 33

Suitability analysis which covers the customers financial situation, investment experience, and financial objectives

Question 34

The customer must be provided with the amount and source of any ______________ That the broker dealer received in connection with the trade

Answer 34

Compensation

Question 35

A broker dealer does NOT Have to conduct a suitability analysis if the customer is?

Answer 35

And established customer

Question 36

Common stock holders are paid

Answer 36

After bondholders and preferred stockholders have been paid

Question 37

Which is NOT a type of common stock? A. Re-issued stock B. Treasury stock C. Authorized stock D. Outstanding stock

Answer 37

A. Reissued Stock

Question 38

In cases where a stock or bond is not endorsed or not endorsed properly, the stockholder can do what?

Answer 38

Send a stock or bond power

Question 39

If they come in stockholder is unable to attend a meeting he can still vote on any issue presented by?

Answer 39

Submitting a vote by proxy

Question 40

The right to transfer is what gives the shareholder the right to sell their shares....

Answer 40

To the highest bidder