Equity Securities Flashcards Preview

Series 62 > Equity Securities > Flashcards

Flashcards in Equity Securities Deck (20):
1

Six core elements of a stock certificate are...

1. Corporation name
2. Number of shares
3. Name of registered owner
4. Transfer agent
5. Registrar
5. Signature if corporation's authorised officer

2

What's the order of liquidation?

1. Bond holders
2. Preferred stockholders
3. Common stockholders

3

When might a preferred stockholder have voting rights?

If preferred dividends have been omitted for a specified period

4

How does cumulative voting benefit small shareholders?

For five directorships, then can accumulate their five votes and place for one candidate

5

How do you calculate theoretical value of a right?

When selling "cum rights":
(Market price – subscription price) / (number of rights required + 1)

When selling "ex rights" omit the +1

6

If a warrant is "detachable" it...

...can be bought/sold separately to the stock to which it was attached

7

Why do warrants initially have no intrinsic value?

Because the subscription price is typically higher than the market price

8

How do you calculate "outstanding stock"?

Issued stock less treasury stock (shares issued and now owned by corporation – reacquired to increase EPS or have stock for options)

9

Preferred dividends are not guaranteed, have preference over common dividends, and are usually stated as...

A % of par value of $100

(Typically fixed unless a "floater" where rate changes)

10

Senior securities if a corporation include...

Preferred stock and bonds

11

Key feature of cumulative preferred...

No common stock dividend if preferred stock is in arrears

12

Key feature of participating preferred?

Can receive additional dividends over stated return of common stock dividends exceed a certain level

13

Key feature of callable preferred?

Corporation has a right to buy back, usually at premium to par value

14

How many stocks in DJIA?

30

15

How is S&P 500 calculated?

Weighted average based on capitalisation

16

BD department that sends notices of AGMs to stockholders?

Proxy department

17

Notice period on a proxy?

20 calendar days

Or send an Internet notice 40 days prior

18

When must shareholders be told of a tender offer?

On day of announcement

19

In an ADR what's the difference between custodian bank and depositary bank?

Custodian bank (eg in Europe) holds the shares, depositary bank (eg in NYC) issues the ADRs

20

Key features of a warrant?

Buy stock at a fixed price – same as options and rights but last longer, sometimes in perpetuity