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Stock 110513192153 Phpapp02 PDF
Stock 110513192153 Phpapp02 PDF
STOCK
Acquisition of stock
A merger or consolidation in which an acquirer purchases the acquiree's stock.
Adjustable rate preferred stock
Abbreviated ARPS. Publicly traded issues that may be collateralized by mortgages
and MBSs.
American stock exchange
Abbreviated AMEX. A market located in New York City that handles approximately
one-fifth of all securities trades within the United States.
Abbreviated AMEX. The second-largest stock exchange in the United States. It
trades mostly in small-to medium-sized companies.
Auction rate preferred stock
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Abbreviated ARPS. Floating rate preferred stock, the dividend on which is adjusted
every seven weeks through a Dutch auction.
Authorized stock
The number of shares of stock that a corporation is permitted to issue. This number
of shares is stipulated in the corporation's state-approved charter, and may be
changed only by a vote of the corporation's stock-holders.
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classes of stock that may have greater or lesser voting rights than the ordinary
common shares. For many years the New York Stock Exchange only permitted one
class of common stock for a listed corporation.
A class of stock in a company, normally with voting rights. Corporations may have
several classes of common stock, as well as Preferred Stock, or they may have a
single class of common stock. Common stockholders are on the bottom of the ladder
in a corporation's ownership structure, and have rights to a company's assets only
satisfied.
Common stock equivalent
Abbreviated CSE. All contingent securities that derive a major portion of their value
from their conversion privileges or common stock characteristics.
A convertible security that is traded like an equity issue because the optioned
common stock is trading high.
Common stock market
The market for trading equities, not including preferred stock.
Common stock ratios
Ratios that are designed to measure the relative claims of stockholders to earnings
(cash flow per share), and equity (book value per share) of a firm.
Common stock/other equity
Value of outstanding common shares at par, plus accumulated retained earnings.
Also called shareholders' equity.
Conflict between bondholders and stockholders
These two groups may have interests in a corporation that conflict. Sources of
conflict include dividends, distortion of investment, and underinvestment. Protective
after bond holders, preferred shareholders and other debt holders have been
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preferred stock.
Convertible preferred stock
Preferred stock that can be converted into common stock at the option of the
holder.
Cost of a new issue of common stock
Determined by calculating the cost of common stock after considering both the
amount of underpricing and the associated flotation costs.
Cost of preferred stock
The relationship between the cost of the preferred equity and the amount o funds
provided by the preferred share issue: found by dividing the annual preferred share
dividend, by the net proceeds from the sale of the preferred stock.
Cumulative preferred stock
Preferred stock for which all passed (unpaid) dividends in arrears must be paid
along with the current dividend before payment of dividends to common
shareholders.
Preferred stock whose dividends accrue, should the issuer not make timely
dividend payments. Related: non-cumulative preferred stock.
Cyclical stock
convertible bonds that have the same conversion features as the convertible
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A fund that invests in stocks with prices that are above average in relation to their
current earnings because they are considered to have above-average growth
prospects.
Growth stock
A company with excellent prospects for above-average future increases (or growth)
for sales, earnings, and price. Look for a company that is a leader in its industry.
Common stock of a company that has an opportunity to invest money and earn
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cash, or sell a portion of the stock. Margin rules are federally regulated, but margin
requirements and interest may vary among broker/dealers.
New york stock exchange
Abbreviated NYSE. Also known as the Big Board or The Exhange. More than 2,00
common and preferred stocks are traded. The exchange is the older in the United
States, founded in 1792, and the largest. It is located on Wall Street in New York
City
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stated date. A limit is placed on the value of the shares the investor receives.
Preferred stock
A security that shows ownership in a corporation and gives the holder a claim, prior
to the claim of common stockholders, on earnings and also generally on assets in
the event of liquidation. Most preferred stock pays a fixed dividend that is paid prior
to the common stock dividend, stated in a dollar amount or as a percentage of par
value. This stock does not usually carry voting rights. The stock shares
characteristics of both common stock and debt.
The third major source of long-term financing for corporations that broadens the
firm's capital structure, raising financing without giving up ownership or incurring
obligations. Preferred shares get their name because they have some form of
superior preference to either or both earnings and assets upon corporate dissolution
that is superior to (preferred) the common share class. Preferred shares usually
carry a stated value, a fixed dividend and a cumulative feature in addition to the
aforementioned preferences.
A class of ownership in a corporation with a stated dividend that must be paid
before dividends to common stock holders. Preferred shareholders have a claim,
prior to common stockholders, on earnings and assets in the event of liquidation.
Preferred stock does not usually have voting rights.
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This is similar to common stock, however, it pays a fixed preferred dividend similar
to debt. They maybe cumulative or noncumulative. Also, the maturity may be fixed or
perpetual.
Is an equity security which has a priority relative to ordinary common shares for
dividends and return of par amount in the event of a corporate dissolution. Often,
preferred shares are nonvoting equity interests. However, a default in the payment
of that issue's preferred dividend or other covenant breach may temporarily give the
preferred holders voting powers. Preferred shares can have convertible, cumulative,
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generally institutes a reverse split to boost its stock's market price and attract
investors.
Safety stock
Extra inventories that is held to prevent stockouts of important items.
Small ordinary stock dividend
A stock dividend that represents less than 20 to 25 percent of the common stock
Stock
Holders have residual claims to firm and they are the owners. Holders allowed to
elect the board of directors which hires, fires, and sets the compensation of top
executives. Returns to common stock occurs with dividends declared by the board
and capital gains on sale of stock. Preferred stock has both debt and equity
characteristics. Pays fixed dividends (like debt) and dividends may be skipped (like
stocks). Holders of preferred stock do not vote at the annual shareholders meetings.
All preferred dividends must be paid before common dividends can be paid.
Ownership of a corporation which is represented by shares which represent a
piece of the corporation's assets and earnings.
Stock dividend
The payment to existing owners of a dividend in the form of stock.
A payment of additional stock to shareholders, rather than a cash dividend. Such
payment increases the number of shares held but does not alter a shareholder's
proportional investment in the company.
Payment of a corporate dividend in the form of stock rather than cash. The stock
dividend may be additional shares in the company, or it may be shares in a
subsidiary being spun off to shareholders. Stock dividends are often used to
conserve cash needed to operate the business. Unlike a cash dividend, stock
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certain common stocks. The two major national stock exchanges are the New York
Stock Exchange (NYSE) and the American Stock Exchange (ASE or AMEX). Five
regional stock exchanges include the Midwest, Pacific, Philadelphia, Boston, and
Cincinnati. The Arizona stock exchange is an after hours electronic marketplace
where anonymous participants trade stocks via personal computers.
Stock index option
An option in which the underlying is a common stock index.
Stock market
Also called the equity market, the market for trading equities.
Stock option
An incentive allowing management to purchase stock at the market price set at the
time of the grant. Options, generally extended to management, that permit purchase
of the firm's common stock at a specified price (often at a substantial discount from
current market value) over a stated period of time.
An option in which the underlying is the common stock of a corporation.
Stock purchase plans
An employee fringe benefit that allows the purchase of a firm's stock at a discount
or on a matching basis with a part of the cost absorbed by the firm.
Commission (SEC), that are made up of members that use the facilities to exchange
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financial press and most daily newspapers. See also: Bond Quote.
Stock replacement strategy
A strategy for enhancing a portfolio's return, employed when the futures contract is
expensive based on its theoretical price, involving a swap between the futures,
treasury bills portfolio and a stock portfolio.
Stock repurchase
A firm's repurchase of outstanding shares of its common stock.
Stock selection
An active portfolio management technique that focuses on advantageous selection
of particular stocks rather than on broad asset allocation choices.
Stock split
A method commonly used to lower the market price of a firm's common shares by
increasing the number of shares belonging to each shareholder.
Directors of a company may order a stock split to make the shares more affordable
for small investors. If a shareholder holds 100 shares at the current share price of
$40, and the stock splits 2 for 1 (2 new for 1 old share), the new share price would
be $20, and the shareholder would then hold 200 shares. In both cases, the total
value of all shares would remain at $4000. All historical per-share items (such as
1/8ths of a point, (where 1/8th equals 12.5 cents). Stock quotes are listed in the
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price per share and earnings per share) are adjusted by data providers to account
for the stock split. Total sales and net income figures do not change. Stock splits by
themselves do not add any value to an investor's portfolio. However, only companies
that have experienced growth in their share prices will typically split their shares.
See also: Reverse Split.
Occurs when a firm issues new shares of stock but in turn lowers the current
market price of its stock to a level that is proportionate to pre-split prices. For
and holders of the stock will have twice as many shares than they had before the
split. See: split.
Stock swap transaction
An acquisition method in which the acquiring firm exchanges its shares for shares
of the target company according to a predetermined ratio.
Stock symbol
Also known as Ticker Symbol. A unique symbol assigned to a security. NYSE and
AMEX listed stocks have symbols of three characters or less. NASDAQ-listed
securities have four or five characters
Stock ticker
This is a lettered symbol assigned to securities and mutual funds that trade on U.S.
financial exchanges.
Stock's multiple
See Price-Earnings Ratio.
Stockbroker
An individual or firm that charges a fee or commission for executing buy and sell
orders submitted by another individual or firm. (2) The role of a firm when it acts as
example, if IBM trades at $100 before a 2-for-1 split, after the split it will trade at $50
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an agent for a customer and charges the customer a commission for its services.
Stockholder
Holder of equity shares in a firm.
Stockholder equity
Balance sheet item that includes the book value of ownership in the corporation. It
includes capital stock, paid in surplus, and retained earnings.
Set of books kept by firm management for its annual report that follows Financial
Accounting Standards Board rules. The tax books follow IRS tax rules.
Stockholders' equity
See Shareholders' Equity.
The residual claims that stockholders have against a firm's assets, calculated by
subtracting total liabilities from total assets.
Stockout
Running out of inventory.
Stocks and bonds hedge funds
Are combinations which are analogous to Balanced Mutual Funds but, depending
on the underlying charter, can use higher degrees of leverage or derivatives.
Treasury stock
Shares which have been repurchased from shareholders. The stock is held in the
treasury and is listed on the company's Balance Sheet. It is available for retirement
or resale. It is issued but not outstanding.
Common stock that has been repurchased by the company and held in the
company's treasury.
Stockholder's books
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Is the amount of stock held by a corporation after its issuance. When it is held by
the corporation, it is nonvoting and no dividends are paid. These shares may be
reissued subsequently for various purposes. At that time, they regain their voting
rights and dividend status. These shares may also be permanently retired. See
Authorized Shares and Issued Shares for related terms.
Value fund or value stocks
A fund that invests in stocks with prices that are below average in relation to their