Term
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Definition
| 1.The charge that a broker-dealer assesses for executing an agency trade for the customer.
2.The difference, in a principal transaction, between the price charged to the customer and the prevailing interdealer price. |
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Term
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Definition
| 1.Every broker-dealer is a member of the SIPC (Securities Investor Protection Corp.)
2.Provides coverage for each customer up to a max of $500,000, of which no more than $100,000 may be for cash losses. |
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Term
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Definition
| Type of brokerage account that allows investors to but scurities on credit.
Example-Fred has a Cash/margin acct. Has $300k in stock, $50k in cash. Has $40k of equity in margin acct. If broker goes bankrupt, SIPC would combine cash/margin acct to determine how much coverage he has. He would receive $390k. |
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Term
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Definition
| Requires all BD's, investment companies, and investment advisers registered with the SEC to adopt policies and procedures reasonably designed to protect the privacy of the confidential info that they collect from their clients. Also must give clients a description of these policies. |
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Term
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Definition
| 1.Has an ongoing relationship with firm.
2.Provides info to the firm in connection with a potential transaction. |
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Term
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Definition
| If a corp. fails the most a shareholder can lose is their original investment. |
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Term
| 1.Affiliated Directors
2.Nonaffiliated Directors |
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Definition
| 1.Members of the board of directors who are also apart of the corp.(VP, President)
2.Directors not otherwise affiliated with the corp. |
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Term
| Debt financing/Equity financing |
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Definition
| Different ways to raise capital for a corp. |
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Term
| 1.Common Stock
2.Preferred Stock |
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Definition
| 1.First type of stock a corp. would issue
2.Not all corps. issue preferred. Has preference over common stockholders regarding payment of dividends. Also, if the company liquidates its assets. |
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Term
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Definition
| 1.Bondholders
2.Preferred stockholders
3.Common stockholders |
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Term
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Definition
| 1.Stock Certificate-States the name of corp, owner's name, and number of shares owned. Also shows names of transfer agent and registrar.
2.Right to Transfer-Have right to freely transfer shares. Sell them, give them away, bequeath them to heirs.
3.Right of Inspection-Right to inspect certain books and records of company. |
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Term
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Definition
| Issued with a par value used for company's financial statement. THERE IS NO RELATIONSHIP BETWEEN PAR VALUE OF AN EQUITY SECURITY AND ITS MARKET VALUE. |
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Term
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Definition
| 1.Authorized Shares-When corp is chartered, it is authorized to issues certain number of shares. Subject to change by majority vote from stockholders.
2.Issued shares-Actual number of shares sold. Ones that have not been sold/distributed are called unissued stock
3.Treasury Stock-Stock issued and then bought back by the company.
4.Outstanding Stock=Issued stock less Treasury stock. |
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Term
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Definition
| 1.Portion of corps profit paid to common/preffered shareholders.
2.Board of Directors decides about the dividends.
3.Paid on a per-share basis |
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Term
| Dividends (2)
ORDER OF PAYMENT |
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Definition
| 1.Declaration Date-Date that dividend is authorized by BOD.
2.Record Date-Date on which the shareholder must officially own the stock to be entitled to receive the dividend.
3.Payment Date-Date that dividend is actually paid. (Usually quarterly, taxable in the year in which they were paid/received) |
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Term
| Dividends (3)
EX-DIVIDEND/STOCK DIVIDEND |
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Definition
| 1.Ex-Dividend Rule-The time when stocks trade without the dividend. Usually on the second business day prior to the RECORD DATE. A person purchasing stock on or after ex-dividend date will not receive the quarterly cash dividend.
2.Stock Dividend-Paying a dividend in stock rather that in cash. Not taxable until shares are sold. |
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Term
| Dividends (4)
STOCK SPLITS |
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Definition
| 1.Stock Split-Making the stock more marketable, cheaper
2.Reverse Stock Split-Making the stock more expensive |
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Term
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Definition
| ONLY COMMON STOCKHOLDERS HAVE VOTING RIGHTS!!! Ownership of 100 shares=100 votes. |
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Term
| Statutory vs. Cumulative Voting |
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Definition
| 1.Statutory Voting-Shareholders vote each of their shares once for each director slot being contested.
2.Cumulative Voting-May multiply number of shares they own by the number of directors being elected and cast all the votes any way they want. (Favors small shareholders as they have a better chance of electing at least one director who they like.) |
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Term
| Rights offering and Warrants |
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Definition
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Term
| Preffered Stock (1)
BASICS |
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Definition
| 1.Normally issued by established companies that have already issued common stock.
2.Intended for investors who are more interested in income than capital appreciation (BONDS).
3.Don't usually have voting rights |
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Term
| Preffered Stock (1)
BASICS |
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Definition
| 1.Normally issued by established companies that have already issued common stock.
2.Intended for investors who are more interested in income than capital appreciation (BONDS).
3.Don't usually have voting rights |
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Term
| Preffered Stock (1)
BASICS |
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Definition
| 1.Normally issued by established companies that have already issued common stock.
2.Intended for investors who are more interested in income than capital appreciation (BONDS).
3.Don't usually have voting rights |
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Term
| Preffered Stock (1)
BASICS |
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Definition
| 1.Normally issued by established companies that have already issued common stock.
2.Intended for investors who are more interested in income than capital appreciation (BONDS).
3.Don't usually have voting rights |
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Term
| Preffered Stock (1)
BASICS |
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Definition
| 1.Normally issued by established companies that have already issued common stock.
2.Intended for investors who are more interested in income than capital appreciation (BONDS).
3.Don't usually have voting rights |
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Term
| Preferred Stock (1)
BASICS |
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Definition
| 1.Normally issued by established companies that have already issued common stock.
2.Intended for investors who are more interested in income than capital appreciation (BONDS).
3.Don't usually have voting rights |
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Term
| Preferred Stock (2)
DIVIDEND BASICS |
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Definition
| 1.Normally issued with a par value of $100, and always carries a specified dividend.
2.5% preferred stock is expected to yield $5 annually.
3.Sometimes the dividend rate is the stated dollar amount. ($3 preferred stock is expected to pay 3% annual dividend) |
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Term
| Preferred Stock (3)
DIFFERENT TYPES OF:
CUMULATIVE AND NONCUMULATIVE |
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Definition
| 1.Cumulative Preferred-If the company fails to pay the full dividend, all the preferred dividends that are owed (in arrears) must be paid before common stockholders can receive any dividends.
2.Noncumulative Preferred-If preferred stock is noncumulative, dividends owed are not paid to stockholders. |
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Term
| Preferred Stock (3)
DIFFERENT TYPES OF:
PARTICIPATING,CALLABLE,CONVERTIBLE |
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Definition
| 1.Participating-May receive a higher dividend than what is stated if the corp is doing well. (RARE)
2.Callable-Company has right to repurchase the stock at a specific price some time in the future. Call price is higher than the stock's par.
3.Convertible-Investor may convert preferred to common at their discretion.
Appeals to investors who want higher, more secure income than common stocks typically provide but also want the higher potential for capital appreciation. |
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Term
| Classifications of Stocks (1)
Blue Chip,Growth,Defensive |
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Definition
| 1.Blue Chip-High-grade issues of major companies that have already established themselves (GE, XOM)
2.Growth-Company's sales, earnings, and share of market are expanding faster than the market. (GOOG)
3.Defensive-Resistent to a recession. Sectors of "necessary" service (electric and gas). |
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Term
| Classification of Stocks (2)
Income, Cyclical, ADR |
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Definition
| 1.Income-Pay higher than average returns. Dividends are high in relation to the market. (Elderly people)
2.Cyclical-Companies whose earnings fluctuate with the economy. (steel, automobiles)
3.ADR-American Depository Receipts. Trading of FOREIGN stocks in U.S. |
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Term
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Definition
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