Unit 1 - Individual Securities - Equities
American Depository Receipts (ADRs)
"Certificates" created by organizations such as banks; represent ownership in stocks of foreign companies that are held in trust by a bank located in the country where the stock is traded.
Rule 144 Control Stock
: Control stock is any security owned by an insider or affiliate (officer, director, or >10% shareholder) of that company. The sale of control stock is subject to volume limitations. Affiliates can sell the greater of: 1% of the outstanding shares, or The average reported weekly trading volume during the preceding four weeks
stock warrant
A certificate that grants the owner the option to buy a given number of shares of stock, usually within a set time period.
Restricted Stock
A grant of stock with restrictions. It cannot be sold until certain conditions are met, most often the lapse of time or meeting a performance goal.
preferred stock
A special type of stock whose owners, though not generally having a say in running the company, have a claim to profits before other stockholders do.
Which of the following would likely require shareholder approval?
Declaring a dividend Firing the CEO Hiring a new CFO Changing the corporation's name (CORRECT)
Stock Rights
Existing stockholders have the right (preemptive privilege) to purchase newly issued shares in proportion to their holdings.
All of the following are considered securities except
U.S. minted gold coins (correct) common stock of ABC corp. 15 british pound put contracts treasury bonds
which of the following is not a security that an investor would purchase?
common shares of ABC corp. debt issue by ABC corp. Bitcoins (correct) windmill growth fund
Declaration date
date BOD approves a dividend payment
Payable date
dividend disbursing agent sends dividend checks to all stockholders whose name appears on the books as owners as of the record date
Another term for stocks and bonds is
equity and debt
ex-dividend date
ex-date is one business day before record date - stock must be purchase before ex-date to receive dividend
Which of the following securities would likely provide the greatest potential for capital appreciation?
preferred stock U.S. treasury STRIP common stock (CORRECT) convertible bond
ABC corp. has declared a dividend payable next month. The actual ex-dividend date will be declared by
the OTC the NYSE (CORRECT) FINRA the CBOE
Record date
the stockholders of record on the record date receive the dividend distribution
Security
An intangible financial asset that may be bought, sold, or gifted between persons. It may be represented by a paper certificate of held in an electronic record.
Control Stock
Stock acquired by an affiliated person such as officer or director
Two major types of securities
Stocks (equities) and bonds (debt)