which of the following securities receives no div. and has no voting rights?
Treasury Stock ADRs Preferred Stock Common Stock
who are the rights delivered to ?
Rights are delivered to the "agents" listed on the offering sheet
Outstanding Stock Formula
Issued - Treasury = Outstanding Stock
Minority shareholders have a better chance of electing a director of their choice
which of the following companies is most likely to pay stock dividend?
A company with a small cash balance and earnings growing at 20% per yr
a company w/ a small cash balance would be most likely to pay a stock dividend.
what best provides investment income and appreciation?
A REIT provides income via div. and offers the potential for capital appreciation
growth stock provide capital appreciation but generally pay little to no dividends
a warrant doesn't pay dividends
a utility stock is appealing bc its reliable and often large div. but doesn't offer as much capital appreciation potential as a REIT
cash dividends paid to investors
All of the following are rights of a common stockholder EXCEPT for the right to
receive fixed cash dividends
Common Stockholders have the right to
receive dividends
once the BOD declares a div.
Vote on important matters such as BOD
Inspect certain corporate books and records receive a stock certificate
when a corporation is planning to distribute new shares of common stock to its existing shareholders
Common stockholders have all of the following right EXCEPT
Vote for senior management of the company
All of the following are defensive stocks EXCEPT
Which of the following is true regarding stock split?
The stockholders percentage ownership remains unchanged
when a common stock's price tends to rise quickly when the economy is strong and fall quickly when the economy is weak
A single 25 yr old investment banker has income of 300K and a net worth in excess of a million dollars. her investment obj. is capital appreciation. all of the following would appropriate for this investor except
High yield preferred stocks. since her objective is capital appreciation, the high yield preferred stock would be the least appropriate since preferred stocks are generally less volatile than common stocks .
A corporate stockholder has a "residual claim" this refers to the stockholders right to
corporate assets remaining at dissolution after satisfaction of senior obligations
with regard to common stock prior stockholders vote is req for which of the following
calculate div payout ratio: total cash div paid to common shareholders: $10,000,000
total outstanding common share: $5,000,000 EPS: $5.00
1st: Div paid to CS/Outstanding CS = Dividend per share now you take DIV. per share/EPS = DIV PAYOUT RATIO
10,000,000/5,000,000 = $2.00 $2.00 / $5.00 = .40 OR 40%
An investor buys 100 shares of ABC common stock at $85.50 per share. the stock pays a quarterly dividend of $1. if the common stock is currently trading at $95.50 per share what is the current annual dividend yield
($1 X 4) = $4
Annual DIV/CMP
$4 / $95.50 = 4.19%
what gives the B/D the right to vote on his clients behalf
which of the following is NOT a benefit of owning preferred stock rather than common stock
Preferred shareholders have preemptive rights ahead of common shareholders
preemptive rights are given to common shareholders only not preferred stockholders
preferred stock carries which of the following traits?
Dividends on preferred stock are typically paid on a qtrly basis
preferred stockholders have a priority claim on assets of a
company upon dissolution over common shareholders
current stock price: $55
Qtrly div. $1.30
what is the yield
Annual Div. / MKT PX
$1.30 X 4 = 5.20
$5.20 / $55 = 9.5%
which of the following securities could pay a dividend in cash or in other securities
Common Stockholders Mutual Funds Muni Bonds Corp Bonds
when a company does a rights offering,
only given to existing shareholders, proportionately to shares held
rights are a short term privilege
which of the following statement concerning REITs are correct
they must be registered with the SEC before a public sale
they are not considered tax shelter investments bc operating losses do not pass through to the owners of the REIT
preemptive rights clause in a corporate charter includes all of the following characteristics
allows the existing shareholders first right of refusal on the newly issued shares
protects the existing shareholders from dilution of shares
Allows the existing shareholders control over newly issued shares
EXCEPT
requires the corporation to repurchase shares from existing shareholders at predetermined intervals
which of the following are true concerning treasury stock
doesn't vote doesn't receive div. appears on the balance sheet as a deduction from issued stock
an "owner" of a corporation would include:
common
stock holders preferred stock holders
when interest rates change which of the following securities would have the greatest reaction
Preferred Stock
Remember: Interest rates affect fixed income securities directly bc of the inverse relationship that price has to interest rate fluctuation
an investor that has received rights through preemptive rights offering could do all of the following EXCEPT
Redeem the rights for their cash value
an organization that owns and operates income producing property like shopping centers and apartment buildings and distributes most of its taxable income to its shareholders
which of the following types of industries would be affected most by changes in interest rates
Utilities
bc they are very highly leveraged
which of the following is probably a growth stock
Growth companies have high retained earnings and low dividends
which of the following features on preferred stock allows investors to receive unpaid dividends prior to the payment of dividends to common stock shareholders
which of the following securities have over time best kept of with inflation
on the ex date for 20% stock div. a customer with a short position of 300 shares of common stock would
Owe an additional 60 shares of common stock
300 shares X .20 = 60 shares