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Definition of Common Stock
A financial security that represents an ownership claim on the
Ownership shares in a publicly held corporation.
Shares of ownership sold to the public.
That part of the capital stock of a corporation that carries voting rights and represents
These are securities that represent equity ownership in a company. common shares let an
The theoretical amount per share that each stockholder would receive if a company’s assets were sold on the balance sheet’s date. Book value equals:
A convertible security that is traded like an equity issue because the optioned
The market for trading equities, not including preferred stock.
Value of outstanding common shares at par, plus accumulated retained
Ratios that are designed to measure the relative claims of stockholders to earnings
The rate of return required by the investors in the common stock of
How much profit a company made on each share of common stock this year.
This is a fund that buys common stock, preferred stock and bonds. The same as a
Ownership shares issued by a business corporation. A business
The combination of debt, preferred stock, and common stock used
A summarization of the financial statements of a parent company and
The percentage by which the conversion price in a convertible security exceeds the
The number of shares of common stock that the security holder will receive from
Bonds that can be converted into common stock at the option of the holder.
Preferred stock that can be converted into common stock at the option of the holder.
The contractually specified price per share at which a convertible security can be
A security that can be converted into common stock at the option of the security holder,
Cost of Equity
Same as the cost of common stock. Sometimes viewed as the
Indicator of financial leverage. Compares assets provided by creditors to assets provided
A common term for convertible bonds because of their equity component and the
Discretionary cash flow
Cash flow that is available after the funding of all positive NPV capital investment
Dividend discount model (DDM)
A model for valuing the common stock of a company, based on the
dividend growth method
a method of computing the cost
Employee stock fund
A firm-sponsored program that enables employees to purchase shares of the firm's
Ownership. common stock represents equity in a corporation.
The net worth of a business, consisting of capital stock, capital (or paid-in) surplus (or retained earnings), and, occasionally, certain net worth reserves. common equity is that part of the total net worth belonging to the common shareholders. Total equity includes preferred shareholders. The terms common stock, net worth, and common equity are frequently used interchangeably.
Total assets divided by total common stockholders' equity; the amount of total assets per
An ownership interest in an enterprise, including preferred and common stock.
The date on which a share of common stock begins trading ex-rights.
An offer by the firm to give one security, such as a bond or preferred stock, in exchange for
Security that grants the security holder the right to exchange the security for the
A statistical procedure that seeks to explain a certain phenomenon, such as the return on a
Also called a busted convertible, a convertible security that is trading like a straight
A method of selling a new issue of common stock in which the SEC declares the registration
common stock of a company that has an opportunity to invest money and earn more than the
A convertible security whose optioned common stock is trading in a middle range, causing
common stock with a high dividend yield and few profitable investment opportunities.
Privately placed common stock, so-called because the SEC requires a letter from the purchaser
Indicator of financial leverage. Shows long-term debt as a proportion of the
Market conversion price
Also called conversion parity price, the price that an investor effectively pays for
Market value ratios
Ratios that relate the market price of the firm's common stock to selected financial
National Association of Securities Dealers Automatic Quotation System. An electronic quotation
common stockholders' equity which consists of common stock, surplus, and retained earnings.
Book value of common stockholders’ equity plus preferred stock.
Generally, the proportion of earnings paid out to the common stockholders as cash dividends.
common stockholder's right to anything of value distributed by the company.
A security that ranks junior to preferred stock but senior to common stock in the right to
A security that shows ownership in a corporation and gives the holder a claim, prior to the
A type of equity security where holders have a claim on the assets
A type of stock that usually pays a fixed dividend prior to any distributions
stock that takes priority over common stock in regard to dividends.
Preferred Stock Stock that has a claim on assets and dividends of a corporation that are prior
to that of common stock. Preferred stock typically does not carry the right to vote.
Compares a stock's market value to the value of total assets less total liabilities (book
Price of a share of common stock on the date shown. Highs and lows are based on the highest and
Return on equity (ROE)
Indicator of profitability. Determined by dividing net income for the past 12
Return on total assets
The ratio of earnings available to common stockholders to total assets.
Issuance of "rights" to current shareholders allowing them to purchase additional shares,
Seasoned new issue
A new issue of stock after the company's securities have previously been issued. A
On an exchange, the member firm that is designated as the market maker (or dealer for a listed
Stated conversion price
At the time of issuance of a convertible security, the price the issuer effectively
Formal organizations, approved and regulated by the Securities and Exchange Commission
Stock index option
An option in which the underlying is a common stock index.
An option in which the underlying is the common stock of a corporation.
a right allowing the holder to purchase shares of common stock during some future time frame and at a specified price
A firm's repurchase of outstanding shares of its common stock.
A fee paid to an underwriter in connection with an underwritten rights offering or an
Transferable put right
An option issued by the firm to its shareholders to sell the firm one share of its
common stock that has been repurchased by the company and held in the company's treasury.
Weighted Average Cost of Capital (WACC)
The weighted average of the costs of the capital components
Acquisition of stock
A merger or consolidation in which an acquirer purchases the acquiree's stock.
Adjustable rate preferred stock (ARPS)
Publicly traded issues that may be collateralized by mortgages and MBSs.
American Stock Exchange (AMEX)
The second-largest stock exchange in the United States. It trades
Auction rate preferred stock (ARPS)
Floating rate preferred stock, the dividend on which is adjusted every
Beta equation (Stocks)
The beta of a stock is determined as follows:
The total amount of plant, equipment, and other physical capital.
Cash flow per common share
Cash flow from operations minus preferred stock dividends, divided by the
The representing of accounting information over multiple years as percentages
common body of knowledge (CBK)
the minimum set of knowledge needed by a person to function effectively in a particular field
An agreement between two or more countries that permits the free movement of capital
Are equity instruments that take no security against assets, have no fixed terms of repayment and pay no fixed dividends.
common-size balance sheet
Balance sheet that presents items as a percentage of total assets.
common-size income statement
Income statement that presents items as a percentage of revenues.
Conflict between bondholders and stockholders
These two groups may have interests in a corporation that
Inventories owned by a company, but located on the premises
Convertible exchangeable preferred stock
Convertible preferred stock that may be exchanged, at the
Cost of Preferred Stock
The rate of return required by the investors in the preferred stock of
Cumulative preferred stock
Preferred stock whose dividends accrue, should the issuer not make timely
The informal and frequently unauthorized retention of excess inventory on the shop floor, which is used as buffer safety stock.
Direct stock-purchase programs
The purchase by investors of securities directly from the issuer.
Dividend yield (Stocks)
Indicated yield represents annual dividends divided by current stock price.
Employee stock ownership plan (ESOP)
A company contributes to a trust fund that buys stock on behalf of
Employee Stock Ownership Plan (ESOP)
a profit-sharing compensation program in which investments are made in
Employee Stock Ownership Plan (ESOP)
A fund containing company stock and owned by employees, paid for by ongoing contributions by the employer.
Exchange of stock
Acquisition of another company by purchase of its stock in exchange for cash or shares.
Low-cost, high-usage inventory items stored near the shop floor,
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