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Unformatted text preview: Series 6 Exam Study Guide : Securities Market, Investment Securities, Economic Factors Equity Common Stock- Gives investors ownership stakes in a company’s profits. Advantages: Limited Liability- Liability as an investor is limited to the amount that you invest Shareholders can transfer their shares to others T ransfer Agents- Bank or Co. that keeps list of all shareholders and deals with all transfer of ownership Right to inspect books and records of the company Have right to vote for any major issue that could affect status as proportional owner of company. Ex: Stock splits, mergers and acquisitions, board of director elections, authorization of more shares, changes in business all require shareholder approval. Dividends: • Can only be paid if so voted by Board of Directors. • If company does declare dividend, common stockholders have “claim” • Dates on dividends- o Declaration Date- Board declares dividend o Record Date- Owner must be on or before date to receive dividend, determined by Board o Payable Date- Board decides when it will pay dividend o Ex-Date- T+ 3 settlement, determined by NASD/NYSE Preemptive Right- Right of existing shareholder to buy, in proportion to current holdings, additional shares of a new issue by the company before the stock is offered to the public. Warrant- Long-term equity security that lets you purchase company’s stock at predetermined price. American Depository Receipt- A receipt issued to someone in America against shares of a foreign stock held on deposit in a bank. Convenience- o Makes it easy for Americans to buy stock in foreign corporations such as, Toyota, Nokia, etc. o They are shares of stocks that might receive dividends I nconvenience- o When the company declares a dividend, they must declare it in that country’s currency, that is then converted to dollars o If the dollar were strong, the currency wouldn’t work out to very many dollars. o If dollar were weak, the currency would convert to more dollars, so owner of an ADR would be better of with weak dollar. Options- Are little contracts(bets) that let the owner buy 100 shares of a stock for a set price or sell 100 shares of stock for a set price. • Options that give investors the right to buy stock at the strike price are called “calls” • Options that give investors the right to sell stock at the strike price are called “puts” • Bulls are in position to buy stock • Bears are in position to sell stock Preffered Stock- A fixed-income equity security whose stated dividends must be paid before common stock can receive any dividend payment. Also gets preference ahead of common stock in a liquidation (but behind all bonds and general creditors)....
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This note was uploaded on 09/20/2010 for the course DS 6351321365 taught by Professor Sdffsd during the Spring '09 term at Acadia.
- Spring '09