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Chapter 11 study guide - Chapter 11 Stock Market Stocks o...

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Chapter 11- Stock Market Stocks o Represent ownership in a company o Gains through capital gains and dividends o Stocks are riskier in bonds due to be junior in claims to bonds and its less assured Common vs Preferred o Common- ownership in a company. Right to vote, receive dividend Multiple classes of common stock- difference in class usually involve the distribution of dividends or voting rights o Preferred- hybrid of common stock and bond. Receive a fixed dividend that doesn’t change Price is stable due to the fixed dividend Typically no voting rights Priority claim is superior to common stock but junior to bonds o Capital breakdown 70% bonds/debt 20% commons stock 5% preferred stock How stocks are sold o Organized securities exchange- specified location where buyers and sellers meet of a regular basis to trade securities Examples- Nikkei (japan), London stock exchange, Dax (germany) o Requirements to be listed on exchange At least 2200 shareholders with monthly trade volumes of 100,000 shares
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