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| Questão | Responda |
| Jim Nash Flashcards | Series 7 |
| Equity Board of Directors | The right to vote either through: Statutory - Must split evenly Cumulative - Any way you want (Small investor benefits) Note: An investor with 100 shares has to vote for 5 directors, they would have 500 votes to split any way he chooses among 5 directors |
| Equity: Transfer of ownership | Transfer Agent - determines good delivery Registrar - Verify the amount of shares. Makes sure corporations don't have more stock outstanding than it has been authorized |
| Equity: Dividends (Only declared by board) | Cash dividend - treated as ordinary income Stock dividends - stock dividend is not taxable (calculate new cost basis) Example: Long 100 Shares @ $50. 10% stock dividend would adjust cost basis $5000/110 shares = $45.45 110 shares x $45.45 = $5000 Stock Splits: Find cost basis and multiply by new # of shares |
| Equity: Cash Dividends | Order of cash dividends: 1. Declaration date (BOD) 2. Ex Date (FINRA - OTC | NYSE - Exchange) - 2 days business days before record date 3. Record Date (BOD) - Dividend entitled if owned on record date. 4. Payable Date (BOD) Cash Settlement - Same Day Regular Way settlement - T+3 |
| Suitability Notes - Equity | Seeing that the first day you can be paid w/o dividend is the ex-date. Someone may want to wait until this date in order to pay less tax. |
| Equity: Rights | Preemptive right/stock rights: - right to maintain percentage ownership -one right per share owned -short term (1 month) up to the ex-rights date set by issuer - right to exercise price below market price Owner of rights may: -Exercise (treat as a contract) - Sell (treat as a security) - Allow to expire Note: Custodians for a minor would exercise rights for a cheaper price or sell them |
| Equity: Warrants | 1. Long term (up to 5 years) 2. Privilege of exercise price above market 3. Can be attached to a bond offering. If a bond is unattractive, it could be sold with a warrant for marketability (treated as separate). Also can get lower interest rate on bonds 4. Exercise, sell, or allow to expire |
| Equity: Preferred Stock | Get dividends (fixed at stated rate) & liquidation proceeds BUT there are no voting rights like common stock. Par value= $100. Suitability: Investors looking for income Types: Straight, Cumulative (previous years added) |
| Equity: Preferred Stock | Price of preferred stock moves inversely with interest rates Characteristics: convertible, callable, participating, adjustable rate. Participating - Possibly higher dividend than arranged Adjustable rate - Adjusted rate annually based in interest rates Note: Participating and adjustable are good for inflation hedging |
| Equity: ADRs | American Depositary Receipts Facilitate US citizens owning foreign shares. A foreign security in a domestic market -holder bear foreign currency risk* -Depositary bank is registered owner of shares - dividends are net of foreign withholding tax* - voting rights not passed on to holder |
| Equity: Return on Investment | Current yield (current rate of return) Example: CMV is $25, annual dividend is 1.40 Current yield = Annual Dividend/CMV 1.40/25 = 5.6% |
| Capital Gains (or losses) | Short-term capital gains - 12 months or less Long-term capital gains - holding period of more than 12 months (year and a day) |
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