65 - Unit 12

An investor in an equity security

acquires an ownership interest in the company

Sell stops are entered

below the market

Preferred stockholders

have a preference as to liquidation and distribution of dividends

ISO

qualified

Only stockholders who are on the company's books by the (BLANK) are eligible to vote

record date

A technical analyst (chartist) with a long position in a particular stock would most likely enter a sell stop order below that stock's

support level

One way in which incentive stock options (ISOs) differ from nonqualified stock options (NQSOs) is that

the bargain element of the ISO is an AMT preference item.

When a stock splits

the number of shares each stockholder has either increases or decreases (in the case of a reverse split) -HOWEVER, The customer experiences no effective change in position because the proportionate interest in the company remains the same.

ISOs can only be granted to

employees

When using the dividend discount model,

future expected dividends are discounted to compute the present value of the stock

Trading volume interests

technical analyst

The simplest model for valuing equity is

the dividend discount model

If there is a 10% or more ownership interest among members of an immediate family living at the same residence

then all members are considered control persons (affiliates) subject to Rule 144.

Whether the grant is of an ISO (qualified) or an NSO (nonqualified)

there are no tax consequences to the recipient at the time of the grant.

Sell stops are used

to turn an order into a market order if the current market value falls below the stop level

A technical analyst is likely to consider

1. Trend lines 2. Advance/decline line 3. Short interest ratio

All the following factors support fundamental analysis while assessing a wide range of qualitative factors

1. the company's competitive position. 2.the company's management team's quality and experience. 3.the company's business model.

A fundamental analyst would be interested in all of the following

1.statistics of the U.S. Department of Commerce on disposable income 2.innovations within the automotive industry 3.corporate annual reports

Which of the following are regulated under the Securities Exchange Act of 1934

Broker-dealers and Transfer agents

A technical analyst is least likely to consider

Corporate earnings

Which of the following might be used by an analyst to approximate a reasonable price for a common stock

The dividend discount model

Options and warrants do not grant the holder the right to receive

dividends on the underlying stock.

The benefit of any convertible security, bond or preferred stock

is that the ability to convert into the issuer's common stock allows those investors to participate in the potential future growth of the company.

ADRs are issued by

large domestic commercial banks to facilitate U.S. investors who want to trade in foreign securities.

NSO can also be granted to

members of the board of directors and even to vendors

NSO

nonqualified

One of the rights of those owning common stock is the opportunity to vote on issues brought up at the corporation's annual meeting. To be eligible to cast a vote,

ownership must be established by the record date

Technical analysis

is an attempt by an analyst to predict the direction of a security's future market price. -Such terms as moving average, trendline, and support and resistance level are then used by an analyst to determine when the time is right to purchase (or sell) the security.

If a support level is broken

this provides a sell signal

Preferred stockholders do not have the right

to subscribe to a rights offering