Investments chapter 6

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Investments chapter 6
2011-10-26 22:02:31
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  1. owners/stockholders of a firm, who are entitled to dividend income and a prorated share of the firm’s earnings only after all the firm’s other obligations have been met.
    Residual owners
  2. Common stockholders are really the ________ of the company—they are entitled to dividend income and a share of the company’s earnings only after all other corporate obligations have been met. Holders of common stock have no guarantee that they will ever receive any return on their investment.
    residual owners
  3. evidence of ownership position in a firm, in the form of shares of common stock
    Equity capital
  4. shares of stock that are readily available to the general public and are bought and sold in the open market
    Publicly traded issues
  5. an offering to sell to the investing public a set number of shares of a firm’s stock at a specific price.
    Public offering
  6. conversion of one of a firm’s subsidiaries to a stand-alone company by distribution of stock in that new company to existing shareholders.
    Stock spin-off~
  7. Companies execute _______if they believe the subsidiary is no longer a good fit, of if they feel they’ve become too diversified and want to focus on their core products.
    stock spin-offs
  8. a maneuver in which a company increases the number of shares outstanding by exchanging a specified number of new shares of stock for each outstanding share.
    Stock split
  9. _________ are used when a firm wants to enhance its stock’s trading appeal by lowering its market price.
    Stock splits
  10. shares of stock that have been sold and subsequently repurchased by the issuing firm
    Treasury stock
  11. common stock issued by a company in different classes, each of which offers different privileges and benefits to its holders.
    Classified common stock
  12. A ______ lot of 100 shares of stock or multiples thereof

    An ______ lot is a transaction involving less than 100 shares
    round, odd
  13. the stated, or face, value of a stock—it is relatively useless and little or no significance for investors, many stocks today are issued as no-par or low-par stocks
    Par value
  14. the amount of stockholders’ equity in a firm; equals the amount of the firm’s assets minus the firm’s liabilities and preferred stock
    Book value~
  15. _________value indicates the amount of stockholder funds used to finance the firm.
  16. the prevailing market price of a security
    Market value
    By multiplying the market price of the stock by the number of shares outstanding, we can also find the market value of the firm itself—or what is known as market capitalization.
  18. the amount that investors believe a security should be trading for, or what they think its worth.
    Investment value
  19. the amount of annual earnings available to common stockholders, as stated on a per-share basis.
    Earnings per share (EPS)~
  20. EPS= Net shares after taxes- preferred dividends
    Number of shares of common stock outstanding