Final Ch. 17 Flashcards Preview

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Flashcards in Final Ch. 17 Deck (14)
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1

common stock

bottom of the priority ladder for ownership structure

2

preferred stock

- priority to claim dividends over common stockholders
- do not have an ownership interest in the firm

3

common stockholders rights (3)

1. residual claim to income
2. voting right
3. right to purchase new shares

4

cumulative voting process

to determine the number of shares needed to elect a given number of directors

5

rights offering

an issue of rights to a companies existing shareholders that entitles them to buy additional sharers directly from the company

6

ex-rights

Shares of stock that are trading but no longer have rights attached because they have either expired, been transferred to another investor or been exercises.

7

poison pill

a rights offering made to existing shareholders of a company, at a very low price
- used to avoid a takeover

8

american depository receipts

A negotiable certificate issued by a U.S. bank representing a specified number of shares (or one share) in a foreign stock that is traded on a U.S. exchange.

9

cumulative dividends

If preferred stock dividends are not paid in any one year, they accumulate and must be paid in total before common stockholders can receive dividends

10

conversion feature

allows a company to confer preferred stock into common stock or convertible debt

11

Call feature

allows corporations for the retirement of security before maturity

12

floating rate

* Floating rate preferred stocks have dividends adjustable in nature
* interest rate that is allowed to move up and down with the rest of the market

13

auction rate preferred stock

The stock is issued to the bidder willing to accept the lowest yield and then to the next lowest bidder, and so on until all the preferred stock is sold

14

par value

of preferred stock is set at the anticipated market value at the time of the issue