Stock valuation - common and preferred stock

17 important questions on Stock valuation - common and preferred stock

Who are the true owners of a corporate business?

Common stockholder, they receive what is left after all other claims on the firm's income and assets have been satisfied.

What is closely owned (stock)?

The common stock of a firm is owned by an individual or a small group of investors; these are usually privately owned companies

What is the par-value common stock?

A value established for legal purposes in the firm's corporate charter and which can be used to find the total number of shares outstanding by dividing it into the book value of common stock.
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What is dilution of earnings?

A reduction in each previous shareholder's fractional claim on the firm's earnings resulting from the issuance of additional shares of common stock.

What is a proxy statement?

A statement transferring the votes of a stockholder to another party.

What is a proxy battle?

the attempt by a non-management group to gain control of the management of a firm by soliciting a sufficient number of proxy votes.

What are supervoting shares?

Stock that carries with it multiple voter per share rather than the single vote per share typically given on regular shares of common stock.

What is the reason why a firm issues nonvoting common stock?

To raise capital through the sale of CS but does not want to give up its voting control.

What is the no-par preferred stock?

Preferred stock with no stated face value but with a stated annual dollar dividend.

What is the cumulative preferred stock?

Preferred stock for which all passed dividends, along with the current dividend must be paid before they pay the common stockholders.

What is noncumulative pref. stock?

Preferred stock for which passed dividends do not accumulate.

What is the conversion feature?

A feature of convertible preferred stock that allows holders to change each share into a stated number shares of common stock.

What are angel capitalist

Wealthy individual investors who do not operate as a business but invest in promising early-stage companies in exchange for a portion of the firm's equity.

What is red harring?

A preliminary prospectus made available to prospective investors during the waiting period between registration statement's filing with the SEC and its approval.

What is a investment banker?

Financial intermediary that specialises in selling new security issues and advising firms with regard to major financial transactions.

What is underwriting syndicate?

a group of other bankers formed by an investment banker to share the financial risk associated with underwriting new securities.

What is a selling group

A large number of brokerage firms that join the originating invest bankers

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