Common Stocks Flashcards
CH 6 (33 cards)
What are blue-chip stocks?
Financially strong, high-quality stocks with long and stable records of earnings and dividends.
Chapter 6
What is book value?
The amount of stockholders’ equity in a firm; equals the amount of the firm’s assets minus the firm’s liabilities, or sometimes assets minus liabilities and preferred stock.
Chapters 6 and 16
What is a cash dividend?
Payment of a dividend in the form of cash.
Chapter 6
What is classified common stock?
Common stock issued by a company in different classes, each of which offers different privileges and benefits to its holders.
Chapter 6
What are cyclical stocks?
Stocks whose earnings and overall market performance are closely linked to the general state of the economy.
Chapter 6
What is the date of record?
The date on which an investor must be a registered shareholder to be entitled to receive a dividend.
Chapter 6
What is the declaration date?
The date on which a firm’s board of directors declares the amount and timing of the firm’s dividend payment.
Chapter 6
What are defensive stocks?
Stocks that tend to hold their own, and even do well, when the economy starts to falter.
Chapter 6
What is the dividend payout ratio?
The portion of earnings per share (EPS) that a firm pays out as dividends.
Chapter 6
What is a dividend reinvestment plan (DRIP)?
Plan in which shareholders have cash dividends automatically reinvested into additional shares of the firm’s common stock.
Chapter 6
What is dividend yield?
A measure that relates dividends to share price and puts common stock dividends on a relative (percentage) rather than absolute (dollar) basis.
Chapters 6 and 16
What does earnings per share (EPS) represent?
The amount of annual earnings available to common stockholders, as stated on a per-share basis.
Chapter 6
What is equity capital?
Evidence of ownership position in a firm in the form of shares of common stock.
Chapter 6
What is the ex-dividend date?
Three business days up to the date of record; determines whether one is an official shareholder and thus eligible to receive a declared dividend.
Chapter 6
What are growth stocks?
Stocks that experience high rates of growth in operations and earnings.
Chapter 6
What are income stocks?
Stocks with long and sustained records of paying higher-than-average dividends.
Chapter 6
What is investment value?
The amount that investors believe a security should be trading for or what they think it’s worth.
Chapter 6
What are large-cap stocks?
Stocks with very high market capitalizations.
Chapter 6
What is market value?
The prevailing market price of a security.
Chapters 6 and 18
What are mid-cap stocks?
Medium-sized stocks, generally with market values of less than $4 or $5 billion but more than $1 billion.
Chapter 6
What is par value?
The stated, or face, value of a stock.
Chapter 6
What is the payment date?
The actual date on which the company will mail dividend checks to shareholders (also known as the payable date).
Chapter 6
What is a public offering?
The sale of a firm’s securities to public investors.
Chapters 2 and 6
What are publicly traded issues?
Shares of stock that are readily available to the general public and are bought and sold in the open market.
Chapter 6
