What is the most you can lose on your investment in common stock, and what is this known as? The amount you put in, known as limited liability The market value at the time of sale Only the dividends received Unlimited loss potential

The amount you put in, known as limited liability

As a common stockholder, what are you entitled to receive annually? Fixed interest payments Guaranteed dividends Priority in liquidation Annual financial reports such as the 10K

Annual financial reports such as the 10K

How often are dividends typically paid to shareholders and on what kind of basis? Quarterly, on a per share basis Bi-annually, on a cumulative basis Monthly, on a variable basis Annually, on a fixed basis

Quarterly, on a per share basis

What is capital gain mathematically defined as? The initial investment amount The total dividends received over time The interest earned on the investment Difference between what you paid per share and what you gained/lost per share when selling

Difference between what you paid per share and what you gained/lost per share when selling

What is treasury stock? Issued stock that has been repurchased and held in the company's treasury Stock that is publicly traded on the stock exchange Stock issued to employees as part of compensation Stock that is held by foreign investors

Issued stock that has been repurchased and held in the company's treasury

If a company repurchases its shares believing they are undervalued, do those repurchased shares receive dividends? They receive dividends only if resold Only if the company decides to distribute dividends No, the company is not paying itself for owning the company Yes, they receive dividends like other shares

No, the company is not paying itself for owning the company

Can repurchased shares be issued to the public if a company believes its stock is undervalued? Only if the market conditions are favorable No, repurchased shares cannot be resold Only with shareholder approval Yes, the company can resell them once they appreciate

Yes, the company can resell them once they appreciate

Do repurchased shares have voting rights if a company believes its stock is undervalued? Only if the company allows it They have conditional voting rights Yes, they retain voting rights No, only outstanding shares get to vote

No, only outstanding shares get to vote

Common Stock Ownership: Rights, Returns, Dividends, and Corporate Governance Principles

Flashcard

Learn Mode

Match

Library

Create

Flashcards

Library

Match (Coming Soon)

Finance - Personal Finance

andrsonztdc Created by 10 mon ago

Cards in this deck(100)

What does common stock (equity) represent in terms of ownership of a company?

What is the return on common stock and how is it defined?

What is the most you can lose on your investment in common stock, and what is this known as?

As a common stockholder, what are you entitled to receive annually?

How often are dividends typically paid to shareholders and on what kind of basis?

What is capital gain mathematically defined as?

What is treasury stock?

If a company repurchases its shares believing they are undervalued, do those repurchased shares receive dividends?

Can repurchased shares be issued to the public if a company believes its stock is undervalued?

Do repurchased shares have voting rights if a company believes its stock is undervalued?

Which corporate decisions do common stockholders vote on, and who decides on the rest?

What document provides information about shareholder meetings and allows investors to vote their shares?

What are the two voting structures that shareholders may use, and what is the difference between them?

What are the four kinds of equity classification?

What are the characteristics of income stock, including industry type, dividend nature, and objectives?

What are the characteristics of growth stock, including dividend nature and objectives?

What are the characteristics of defensive stock, including performance across economic cycles and objectives?

What are the characteristics of cyclical stock, including performance across economic cycles and objectives?

Of income stock, growth stock, defensive stock, and cyclical stock, which are considered more risky?

What are the two main kinds of risks associated with owning common stock, and how are they defined?

What is the best protection against systemic risk?

What is the best protection against non-systemic risk?

In a bankruptcy, common stockholders are paid _____ in terms of liquidation priority.

What do American Depository Receipts (ADRs) allow US investors to do?

How do ADRs work in terms of share movement and currency exchange?

In the context of ADRs, what might a foreign company do when paying a dividend?

Which risks are holders of ADRs exposed to, and which are they not exposed to?

What kind of income does preferred stock provide?

An investor holding preferred stock would expect a return based on what?

Which are paid first: dividends on preferred stock or dividends to common stock?

When are the fixed quarterly payments of preferred stocks set, and what does the company issuing preferred stock always intend to do?

Do preferred stockholders have voting rights?

If an investor owns XYZ 5% preferred with a $100 par value, what dividend payments should the investor expect to receive each quarter?

What should you assume the par value for a stock is if it is not provided?

If XYZ board resolves to skip a quarterly dividend payment to preferred shareholders, the next dividend payment will be _____ for non-cumulative preferred stock.

If a company is doing really well or poorly, who enjoys the extra benefit or bears the brunt of the loss?

Does the following describe common stock or preferred stock: the right to vote for board of directors, pays a regular, fixed dividend payment, higher appreciation potential, may be cumulative, provides a claim on all residual assets and earnings?

What would happen if a cumulative preferred stock skipped a dividend payment?

What criteria does a stock have to meet in order to be considered a penny stock?

What are the investment characteristics of penny stocks?

Do penny stocks have voting rights?

What are pre-emptive rights and what is their purpose from the shareholder's perspective?

A client owns 0.5% of ABC Corp. The common stock grants investors pre-emptive rights. If ABC Corp plans to raise capital by selling 10,000,000 new shares, what does the client receive and what are their options?

What are warrants, and are they long-term or short-term instruments?

What is the value of a warrant tied to?

Are warrants usually issued at an exercise price above or below the share price?

Can you sell a warrant instead of exercising it?

What is a dividend?

What are the important dates for dividends and their definitions?

What is the settlement date in the context of stock transactions?

What is regular way settlement for dividends?

What does cash-settlement mean in the context of stock transactions?

What happens in terms of ownership and payment on settlement?

Are cash dividends taxable to investors, and what about if they are reinvested?

What happens to the price of the stock on the morning of the ex-date?

What is a stock split, and what does it involve?

In a x-for-y split, what does the first number (x) indicate and the second number (y) indicate?

What is a reverse split, and how does it affect the number of shares?

Following an issuer's declaration of a stock split, how do the number of votes and voting power change for the investor?

Are stock splits or stock dividends taxable to investors?

What is a short sale in the context of stock trading?

If someone is doing a short sale, what is their market view?

What is the role of a stock lender, short-seller (client), and buyer in a short sale?

What is the maximum loss on a short position?

What is a bond fundamentally, and who are the investor and issuer?

What is the role of and exchange that goes on between investors and borrowers in a loan?

What is the par value of most bonds?

Are bond prices stable, and what factors influence them?

What is the coupon in the context of bonds, and how often is it paid out?

If an investor buys a 10-year, $1000 par value bond with a 6% coupon, how much interest should the investor expect to receive in each payment, and how much interest will the investor receive if the bond is held until maturity?

Can the bondholder sell the bond after two years, and if so, at what price?

At the end of the life of the bond, the issuer pays _____ to the _____.

If someone buys a bond above or below par value, do they still get paid par value at maturity?

What do interest rates capture or represent in the context of bonds?

What is the relationship between bond prices and interest rates?

As interest rates change, bond prices adjust in order to _____

If interest rates rise, bond prices _____; if interest rates fall, bond prices _____.

What does the term 'interest rate risk' describe?

What features make a bond more sensitive to interest rate risk?

A bond with a low coupon and a long maturity is referred to as having a _____

What is the definition of 'longer duration' in the context of bonds?

A long duration bond will have _____ interest rate risk; a short duration bond will have _____ interest rate risk.

What is the lowest coupon we can see in bonds?

Imagine the coupon rate of a bond is 3%. If the prevailing market rate is 2%, will the bond be trading at a discount, par, or premium? What if the prevailing rate is 4%?

What are the four kinds of bond yields?

What is the definition of coupon yield (nominal yield), and when is it established?

What is the definition of current yield, and does it change?

What is the definition of yield to maturity (YTM)?

What is the definition of yield to call (YTC), and what does 'call' mean in this context?

What are the types of bond yields from lowest to highest when you buy a bond at a discount?

What are the types of bond yields from lowest to highest when you buy a bond at a premium?

What are the types of bond yields from lowest to highest when you buy a bond at par?

How might nominal yield be written in bond terminology?

How might current yield be written in bond terminology?

How might YTM be written in bond terminology?

What are bond quotes, and how are they typically expressed?

How do you get from the bond quote to the price?

When trading at a premium, par, or discount, what are the quotes relative to 100?

When trading at a premium, par, or discount, is the YTM more, equal to, or less than the coupon?

Does the nominal yield aka coupon of a bond change over time?

Ask Our AI Tutor

Get Instant Help with Your Questions

Need help understanding a concept or solving a problem? Type your question below, and our AI tutor will provide a personalized answer in real-time!

How it works

Ask any academic question, and our AI tutor will respond instantly with explanations, solutions, or examples.

Get Started

Browse questions and discover topic-based flashcards
Practice with engaging flashcards designed for each subject
Strengthen memory with concise, effective learning tools

Discover By Topic

Common Stock Ownership: Rights, Returns, Dividends, and Corporate Governance Principles

Related Decks