Equity

Sponsored ADRs or ADSs

- all exchange-listed ADRs are sponsored - that is, the foreign company sponsors the issue to increase its ownership base. - issuers that sponsor ADRs provide holders with financial statements in english

Two types of shareholder votes

1. Statutory voting - most common 2. Cumulative voting

How long does it take for settlement when a trade is done in an equity or equity related security ? AKA "regular way"

2 business days after trade date or "T + 2"

Life of preemptive rights for common shareholders

30-60 days

Current Yield (of Preferred Stock)

Annual dividend income from security/ Market price

Dividend or Current Yield

Annual* dividend Income / Market Price

Non-Sponsored ADRs

Assembled by banks and broker-dealers without the issuer's participation Non-sponsored issued may provide reports in the issuer's native language trade over-the-counter not exchange

Preferred shares dividends are paid in

Cash only Semi-Annual terms Pays at par value

4 features of preferred stocks

Cumulative preferred: All missed dividends must be paid prior to common shares Callable: Issuers have right to call in after a set date (usually after interest rates fall) Convertible: Shareholder can convert to common at predetermined price Participating: Can receive common in extra dividends when BOD declare dividends

Items That Do Not Require A Shareholder Vote

Declare a cash dividend Declare a stock dividend Declare a rights distribution Repurchase shares for its Treasury

Items That Require A Shareholder Vote

Declare a stock split Declare a reverse stock split Issue convertible bonds or preferred stock Issue stock options to officers on a preferential basis

ADR dividends

Declared by issuer in foreign currency and investor receive in dollars

If a company declares and pays a stock dividend, an existing shareholder will have:

Increased shares at a reduced price per share

The essential difference between a sponsored and an unsponsored ADR is:

Issuer sponsorship

Preferred stocks are valued based on

Long term interest rate of the market

Does ADR holders have voting rights ?

No

Does warrants have pre-emptive rights ?

No

Which preferred stocks have the highest dividend yields ?

Non-convertibles

What type of preferred stock are volatile due to interest rate stabilizing ?

Participating

cumulative preferred stock

Preferred stock on which undeclared dividends accumulate until paid; common stockholders cannot receive dividends until cumulative dividends are paid. (all preferred stocks are fixed dividend semi annually)

Rights of common shareholders

Right of inspection Right to vote Right to receive dividends Right to evidence of ownership Right of transfer

What values does warrant have ?

Time value Warrants do not represent equity ownership of a corporation but it is equity related security Do not have pre-emptive right

Can proxies be revoked?

Yes

When is the conversion price set ?

at the time the preferred stock is issued and is usually fixed

What is treasury stock?

corporation's own stock that it has reacquired from shareholders, but not retired.

Price Earnings Ratio AKA multiple

market price per share/earnings per share Measure of valuation not profitability

Which security of the same issuer is likely to give the highest current yield?

non-convertible preferred stock

What term would apply to Issued Stock?

par value applies to all stock, whether it is Authorized, Issued, Outstanding or Treasury.

issued stock

represent the total number of shares of stock that have been sold

authorized stocks

shares of common stock that a firm's corporate charter allows it to issue

preferred shareholders do not have:

voting rights preemptive rights