Final Ch. 17 Flashcards
common stock
bottom of the priority ladder for ownership structure
preferred stock
- priority to claim dividends over common stockholders
- do not have an ownership interest in the firm
common stockholders rights (3)
- residual claim to income
- voting right
- right to purchase new shares
cumulative voting process
to determine the number of shares needed to elect a given number of directors
rights offering
an issue of rights to a companies existing shareholders that entitles them to buy additional sharers directly from the company
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.
poison pill
a rights offering made to existing shareholders of a company, at a very low price
- used to avoid a takeover
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.
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
conversion feature
allows a company to confer preferred stock into common stock or convertible debt
Call feature
allows corporations for the retirement of security before maturity
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
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
par value
of preferred stock is set at the anticipated market value at the time of the issue
