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It's primary purpose is to raise business capital. Stock representing equity ownership in a corporation. |
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The maximum number of shares of stock that a company can issue. It's specified initially in the company's charter, but it can be changed with shareholder approval. -AKA- authorized shares or shares authorized. |
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The total number of a company's shares that have been sold and are held by shareholders. |
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Stock a corporation has issued snd subsequently repurchased from the public. Treasury stock has: - no voting rights,
- does not receive dividends
- can be reissued ot retired
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The shares of a corporation's stock that have been issued and are in the hands of the public. These are shares that the company has not repurchased. -AKA- shares outstanding or investor-owned stock. |
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A security's last reported sale price or its current bid and ask prices It is the price investors must pay to buy the stock -aka- market price or current market value |
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The nominal dollar amount assigned to a security by the issuer. For an equity security (common stock), par value is usually a very small amount that bears no relationship to its market price, For preferred stock the par value is $100 For bonds the par value is $1,000 |
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A measure of the net worth of each share of common stock. |
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Shareholders voting for the board of directors may not give more than one vote per share to any single nominee Example: An investor owns 100 shares of stock in the ABC company. An election of the BOD is coming up and several candidates are running to fill 3 seats. The investor thus has total of 300 votes- 100 for each seat. Under statutory voting, he would allocate 100 votes to each of the 3 candidates he prefers. |
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A voting system that gives minority shareholders more power, by allowing them to cast all of their board of director votes for a single candidate. Example: An investor owns 100 shares of stock in the ABC company. An election of the BOD is coming up and several candidates are running to fill 3 seats. The investor thus has total of 300 votes- 100 for each seat. Under cumulative voting, he would, if he wished, allocate all 300 of his votes to a single candidate for just one of the seats. |
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Nasdaq (National Association of Securities Dealers Automated Quotation) System- Over the counter stocks that have national interest are listed 3 Market Designations: Nasdaq Global Select Market Nasdaq Global Market Nasdaq Capital Market (domestic) |
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OTC (Over-the-Counter) Market |
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Securities that are not traded on the exchange. They trade on the over-the-counter bulletin board (OTCBB) -AKA- Non-Nasdaq securities |
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is an equity security because it represents ownership in the corporation. However, it does not normally offer the appreciation potential associated with common stock. **Preferred stock is issued as a fixed-income security with a fixed dividend. **Its price tends to fluctuate with changes in interest rates **It is nonvoting and no preemptive rights **Preferred stockholders receives their dividends before common stockholders **If a corporation goes bankrupt, preferred stockholders have a priority claim over common stockholders |
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Preferred stock with no special features byond the stated dividend payment. *** Missed dividends are not paid to the holder *** |
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CUMULATIVE PREFERRED STOCK |
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Preferred stock on which dividends accrue in the event that the issuer does not make timely dividend payments. **With cumulative preferred, dividends in arrears are made up. **Most preferred stock is cumulative preferred. **Cumulative preferred typically has a lower stated dividend than straight preferred (less risk equals less reward). |
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Which a company can buy back stock from investors at a stated price after a specified date. **Issuers are likely to call securities when interest rates are falling. **Issuers call securities with high rates and replace them with securities that have lower fixed rate obligations. |
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CONVERTIBLE PREFERRED STOCK |
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Is a corporation or trust that pools investors' money and then invests that money in securities on their behalf for a fee. |
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FACE AMOUNT CERTIFICATE COMPANY |
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(FAC) is a contract between an investor and an issuer in which the issuer guarantees payment of a stated (face amount) sum to the investor at some set date in the future. - Pay a fixed rate of return
- Do not trade in the secondary market but are redeemed by the issuer; and
- They are classified as investment companies
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UNIT INVESTMENT TRUSTS (UITs) |
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A unit investment trust (UIT) is an investment company organized under a trust indenture. A UIT functions as a holding company for its investors. - UITs are not actively managed; there is no board of directors or investement adviser
- UITs shares (units) are not traded in the secondary market; they must be redeemed by the trust.
- UITs are investment companies as defined under the Investment Company Act of 1940.
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The firm that organizes, manages, and administers a mutual. |
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OPEN-END INVESTMENT COMPANY |
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Investment company that sells mutual funds to the public, issuing and redeeming shares on demand. |
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A fund with a fixed number of shares oustanding, and one which does not redeem shares the way a typical mutual fund does. Question #1: Where do shares of closed-end companies trade? Answer #1: In the secondary market Question#2: What types of securities can closed-end companies issue? Answer#2: Common stock, preferred stock, and bonds Question#3: Can fractional shares be purchased? Answer#3: No, only full shares can be purchased Question #4: When must a prospectus be used? Answer #4: Only in the IPO (no prospectus is given when the shares are purchased in a secondary market transaction)
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