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SIE Chapter 1 - Equity Securities

Terms in this set (37)

Treasury Stock
_______ is authorized stock that was previously sold to the public but was repurchased by the issuer. Because it is no longer outstanding, the company's share count will fall, and the shares no longer receive dividends or have voting rights. ______ shares may be held by the company, reissued to the public, or cancelled.
treasury stock
A company that believes its stock is undervalued may repurchase shares in the open market (creating ______).
Voting Rights
Holders of common stock have _______, which allow them to exercise control by electing the board of directors and corporate policy. This contrasts with holders of preferred stock, who typically do not have them.
Statutory (Voting)
______ voting allows a shareholder to vote one time per share for each seat on the board of directors. (For example, if an investor owns 100 shares of common stock and there are three board seats to be filled, they can cast up to 100 votes for each of the three seats.
Cumulative (voting)
_______ voting allows the shareholder to pool their votes together and allocate them as desired. (For example, the shareholder above can aggregate all of their votes - 300 total (100 votes x 3 seats) and allocate them however they choose (e.g. they could cast all 300 votes for one candidate or cast 200 for one candidate and the remaining 100 votes for another).
Form 10-K
______ is the form that Public companies must file annual financial reports (which includes financial statements) with the SEC within 90 days of year-end.
Pre-Emptive (Rights)
_____ rights allow a current shareholder to maintain their proportionate ownership interest and avoid dilution when a company issues additional shares.
Warrants
______ are typically issued by a company in conjunction with another security to make that other security more attractive to investors. (For example, a company might use a _____ as a sweetener for investors as part of a debt deal. Unlike pre-emptive rights, _____ do not prevent dilution.
Equity
Warrants are considered _______ securities because if the warrant is exercised, the investor will receive shares in the underlying company. Importantly, warrants do not make interest payments to investors.
a specified exercise price for a set time period
A warrant provides an investor the ability to purchase a company's stock at _____________. For example, the investor is given the right to purchase the stock at $100 per share. The investor would want to exercise this right if the price increases above the exercise price (e.g. an investor wants to pay $100 for stock worth $150 not for stock only worth $50) and therefore the market value of a warrant is tied to the value of the underlying stock.
above (For example, if the current stock price is $50, the exercise price given to the warrants might be $80 - For the warrants to be exercised by an investor, the price would have to increase above the exercise price.)
Warrants are generally not issued with intrinsic value, meaning they are issued with an exercise price ______ the current market value of the stock.
Penny
______ stocks are defined as OTC equity securities ( i.e. unlisted) worth less than $5.00 per share.
blue chip
Stocks of well-established, stable companies with a long history of steady earnings and dividends are known as ______ stocks. These stocks typically trade on the major exchanges such as the NYSE or Nasdaq.
Penny
______ stocks are riskier, more volatile, and less liquid than blue chip stocks.
Wilshire 5000
The ________ is an index which measures the value of U.S. companies with actively traded stock.
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