Series65 MOD 12 Equities

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Series65 MOD 12 Equities
2015-01-29 22:15:17

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  1. Define AMERICAN DEPOSITORY RECEIPTS, also known as ADRs,
    • used to "facilitate the trade of foreign securities in U.S. markets."
    • Holders of ADRs have all of the same rights of any shareholder, except preemptive rights and voting rights.
    • The dividends are declared in the foreign currency and then the bank holding the shares converts the dividend to American dollars and sends it to the holders of the ADRs.
    • Generally, each receipt is for 8, 10, and up to 30 or 40 shares of the foreign stock
  2. Define Capitalization:
    The amount of money has to work. Composed of debt and equity
  3. define ISSUED STOCK
    authorized stock that has been sold to investors by the issuer.
  4. What happens to stock prices on Ex-Dividend date?
    Stock price reduces
  5. 25% Stock Split is equal to:
    25 Shares/100 owned
  6. Define a 5:4 Stock Spilt
    5 Shares for every 4 owned
  7. Who declares Dividends
    Board of Directors; shareholders only receive dividends
  8. Voting difference in types of Stocks:
    • Common stock has Voting Privileges
    • Preferred Stock does not have Voting Privileges
    refers to shares of company stock that are owned by investors.
    refers to shares of the company that have been issued by the corporation but are not considered outstanding because the company has repurchased them.
  11. 2 ways PREFERRED STOCK differs from common stock
    • Preferred Stock Pays a Stated Dividend
    • In liquidation, Preference Over Common Stock
    • Cumulative
    • Participating
    • Convertible
    • Callable
  12. The only preferred stock that receives past dividends that have been missed is:
  13. What kind of stock can be converted (changed) into shares of common stock?
  14. Statutory Voting
    Each Shareholder gets to Vote One Vote per Share Held for Each of the Directors to be Elected
    stockholders may combine all their individual votes and vote in any manner they choose, depending on the number of vacancies on the board and the number of shares the stockholder owns. This allows the small or minority shareholders to obtain representation on the board of directors because they can band together and put all of their votes to one director thereby electing this person to the board.
  16. Describe Warrants:
    • Opportunity to Buy Stock at a Set Price from Company
    • Set Price is a Premium to Offering Price
    • Provided as a "Sweetener" to a Deal
    • # of Shares to be Stipulated on Warrant
    • Warrants are Long-Term
  17. Calculate Conversion Ratio
    • Par Value ($100)/ Conversion Price = Conversion Ratio
    • ex.
    • Par Value: $100/$25 = 4:1 (Conversion ratio)
  18. For what reasons would a company buy back outstanding shares as Treasury Stock:
    • TO fund Employees Stock Option plans
    • To use in mergers or acquisitions
    • To increase earning per share of outstanding shares, which company hopes will increase the market value of the remaining outstanding stock
  19. Formula
    Parity Value of Stock
    • Divide the Preferred Stock Market price by Conversion Ratio
    • $120/share divided by 5 shares =
  20. What are some of the problems with Closely-Held corporations?
    • Only a few people hold a majortity of stock
    • Trading of shares can be difficult
    • Thinly Traded stocks are not very liquid and usually must be held for long periods of time
    • =   MARKET Price / Earnings
    • long-term investors and money managers use P/E ratios to compare companies within the same industries and to determine which stocks are better buys.
  22. Describe Pre-Emptive Rights
    • Rights Allow Existing Shareholders to maintain Proportionate Interest in the Company
    • Opportunity to Buy Stock at a Set Price from Company
    • Set Price is a Discount to Offering Price
    • One Right is Given for Each Share Owned
    • # of Rights Required to Purchase a New Share Varies
    • Rights Allow the Shareholder to Purchase the Same Percentage of the Offering as they Presently Own
    • Rights are Short-Term