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Flashcards

Series 6: Section 1

galayda3434 English 51 cards

Cards in this deck (51)

  1. 1Authorized StockThe maximum number of shares a corporation may issue.
  2. 2Issued StockWhen stock is sold and the company receives money.
    -Primary Issue
  3. 3Initial Public Offering (IPO)When the company offers shares for the first time to the public.
  4. 4Secondary Issued Stock or Non-issuer StockThe sale of outstanding stock by holders of that stock.
    -Company receives no money from this transaction
  5. 5Treasury StockWhen issued stock is repurchased by the company.
    -While stock is held by company the stock has no dividend or voting rights
  6. 6Outstanding StockOnce the stock is sold into the hands of the public.
    -Outstanding stock =issued stock - treasury stock
  7. 7Pre-emptive Rights or Subscription RightsAllow stockholder to maintain proportionate ownership in a corporation
  8. 8Pre-emptive Rights ProsAllow stockholder to purchase additional shares at a discount price from the market price.
    -Option to purchase additional shares before public
  9. 9Rights OfferingsCorporations use this to raise more capital by selling additional shares to existing customers avoiding cost of underwriting
  10. 10Voting RightsCorporations operated by decisions made by the board of directors.
    -Common share holders are the ones who elect the board members
    -This allows common share holders to indirectly control decisions
  11. 112 Types of Voting Rights1. Statutory: whoever has most shares controls company
    2. Cumulative: Shareholders can total their votes
  12. 12The Common Share HolderHas the greatest claim to management but the last claim on company revenues
  13. 134 Types of Preferred Stock1. Straight Preferred
    2. Cumulative Preferred
    3. Participating Preferred
    4. Convertible Preferred
  14. 14Preferred StockAn ownership interest in the company issued with fixed or stated dividend
    -Senior to common stock holders
  15. 15Current yieldCY= Annual Dividend / Market Price
  16. 16Price/Earnings Ratio (P/E)Represents relationship between todays market price and the annual earnings per share of the comp.
  17. 17Earnings Per Share (EPS)EPS= Current Market Price / P/E Ratio
  18. 185 Conditions of Rule 1441. Holding Period
    2. Adequate Current Info
    3. Trading Volume Formula
    4. Ordinary Brokerage Transactions
    5. Filing notice of proposed sale with SEC
  19. 19Warrants vs. RightsRights are short term options whereas warrants are long-term
    -Warrants usually attached to bonds where rights are attached to common stock
  20. 20American Depository Receipts (ADR's)Bc many foreign corporations choose not to register with the SEC their stock can't be purchased in the USA.
    -An ADR is a negotiable receipt for non-american shares of foreign comp.
  21. 21American Depository Receipts (ADR's) Continued...All rights held by common share holders exist except pre-emptive rights.
    ADR's facilitate trading of foreign interests in the American Securities Market
  22. 22Common Stock Dividend OptionsCommon stock holders can receive dividends in the form of additional shares or dollar amounts
    -Preferred stock pays dividends in a fixed dollar amount or a fixed percentage of the par value
  23. 23Relationship between dividends and yieldAs dividends decrease and purchase price stays the same, the yield amount decreases
    -Current yield= annual dividends / Market price
  24. 24Cumulative preferred stockHas the right to receive skipped or missed dividends
    -No dividends can be paid to common stock holders unless preferred dividends are paid first
  25. 25Straight Preferred StockHas no other special feature except the stated dividend
    -All preferred stock has seniority over common
  26. 26Participating Preferred StockAllows share holder to participate in earnings in excess of stated dividends
    -Additional dividends can be paid out along with the common stocks
  27. 27Convertible Preferred StockAllows stock holder to covert their shares at any time into common stock of the same issuer
    -Conversion ratio is fixed at the time of issue
  28. 28WarrantsUsually have the longest period to expiration because they are attached to bonds and last until maturity
  29. 29Corporate BondsIndebtedness that corps are legally required to pay.
    -Has priority over all other claims against company assets
  30. 30Debentures/Unsecured BondsThese securities are backed only by the good faith and credit of the issuing company
    -Because they carry higher risk they are issued with higher rate of interest or special features such as warrants or conversion privilege
  31. 31Secured BondsThese bonds are backed by some form of collateral, deposited with a trustee which is usually a commercial bank
  32. 323 Types of Secured Bonds1. Mortgage Bonds
    2. Collateral Trust Bonds
    3. Equipment Trust Certificates
  33. 33Mortgage BondsMost frequently used secured bond
    -Bonds backed by some form of real estate
    -Considered most secure because its backed by physical assets
  34. 34Collateral Trust BondBacked by stocks or bonds of a subsidiary company corporation
    -Collateral is held by trustee for safe keeping
  35. 35Equipment Trust CertificatesBacked by equipment like airplanes or railroad cars
    -Trustee holds the title to equipment until debt is paid off
  36. 36Yields to Maturity (YTM) and Current YieldsYTM and CY tend to move in the same direction
  37. 37Long Term Bonds and Interest RatesBest time to purchase large lump-sum of long term bonds would be when long term interest rates begin to decline from historically high levels
  38. 38T-BillsT-Bills are issued at a discount with maturities of one year or less
  39. 39US Government Series EE BondsUS Government Series EE Bonds interest is exempt from STATE INCOME TAX
    -
  40. 40Series EE BondsSafe, low risk savings products that earn a fixed rate interest
    -Interest is added to bond monthly and paid out when bond is redeemed
    -Are issued in the name of the holder, making them not negotiable
  41. 41Series EE Bonds GuaranteeAt minimum the US treasury guarantees the EE Bonds value will double after 20 yrs
    -These bonds will earn interest up to 30 years
  42. 42Series I BondsIssued at face value
    -Provide a fixed rate combined with semiannual inflation adjustments helping protect against purchasing power risk
    -Interest and income tax are not paid until bond is redeemed
  43. 43Pros of US Government Bondshave the least amount of financial risk because they are backed by the taxing power of the Fed Govt
  44. 44Municipal BondsAny bonds issued by any authority other than the federal govt
    -Backed only on the good faith and credit of the issuing company
  45. 45General Obligations (GO) Municipal BondsDebts backed by general taxing power of issuer
    -"Full faith and Credit Bonds"
    -Ex: Schools bonds, sewer bonds, street bonds
  46. 46Revenue BondsIssued to provide capital for construction
    -These Municipalities are not obligated to pay back debt on bonds in default
    -Because of higher risk they are often issued with higher interest rates than GO bonds
  47. 47Coupon or Nominal YieldPercentage of return on the face of the bond
    -Fixed from date of issue
  48. 48Bonds and their Market PricesIn the secondary market bonds are interest rate sensitive
  49. 49Rule 144 Holding Period Requirments-The holding period for restricted securities of the reporting issuer is 6 months
    -The holding period for securities of a non-reporting issuer is 1 year
  50. 50Requirements for filing Form 144-For issuers wanting to sell over 5,000 shares or $50,000 in a period of 90 days
  51. 51Rule 144 Volume Restrictions-Within any 3 month period affiliates can't exceed sales greater then 1% of total outstanding shares

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Securities, markets, investment securities and economic factors
Created by
galayda3434
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