Unit 1 and 2 Flashcards

Question

Preliminary prospectus aka red herring

Answer 1

a prospecting tool used to gauge interest in a security

Answer 2

long sales are

Answer 3

These represent ownership in the company and are also referred to as stocks. Owners of stock are called shareholders / stakeholders.

Answer 4

stock authorized to be issued by a company. Usually just enough to meet fund raising needs.

Answer 5

Authorized stock that has been sold to investors. Stocks can be authorized yet go unsold which provides them with fewer rights.

Answer 6

All shares that have been issued and are in the hands of investors. If the stock is bought or donated back to company it is no longer outstanding,

Answer 7

Stock that a corporation has reacquired. Has fewer rights. can be reabsorbed or reissued or held.

Answer 8

Outstanding shares multiplied by CMV

Answer 9

Large,mid, and small cap stocks Penny stock = unlisted on the NYSE and sells for less than $5 per share. These are highly speculative and buying receive a risk disclosure document before initial transaction.

Answer 10

BD must disclose

Answer 11

Paid by check or by direct deposit quarterly. taxed yearly

Answer 12

When a company chooses to issue additional stocks to shareholders instead of cash so that profits are reinvested in the company.

Answer 13

Rare. Company will send sample of product to shareholder as dividend.

Answer 14

Declaration date - the date the dividend was declared by BOD Ex-dividend date - 1 business day before dividend record date. to receive dividend stock must be purchased before this date. Record date - When stockholders receive dividend distribution Payable date - when checks are made to stakeholders on dividend list.

Answer 15

submit an absentee ballet aka a proxy

Answer 16

statutory = one vote per share. BOD needs majority cumulative = stockholders can allocate their votes in any manner the choose. aka split votes up.

Answer 17

stocks can be freely transferred without corporate permission.

Answer 18

stockholders have the right to maintain their proportionate share of ownership if additional shares are created.

Answer 19

Benefits = growth, income, limited liability Risk = value risk, decreased or no dividend income, low priority at dissolution (bankruptcy)

Answer 20

an equity security that has a fixed rate of return rather than a subjective one.

Answer 21

Benefits = dividend preference and priority at dissolution. Risk = purchasing power (from inflation), interest rate sensitivity (increased IR lowers value), decreased or no dividend income, and priority at dissolution.

Answer 22

straight, cumulative, callable preferred, convertible preferred, adjustable- rate preferred, and participating preferred.

Answer 23

an equity security designed to simplify foreign investing for U.S. investors. Easy to use, ADR taxation, and currency/political risk.

Answer 24

from securities act of 1933. applies to restricted stock. These have an issuer release on them that must be removed before traded.

Answer 25

Stock of those who own or control 10% or more of the issuers voting stock. when sold form 144 must be filed out. 1% volume limit.

Answer 26

buying a security directly from owner aka not on secondary market.