What are the key concepts of common stock?
Key Concepts: Terms in this set (52) Common Stock An Equity security that gives the owner the right to receive dividends, vote on company issues, and vote for the board of directors. The common stockholder is the last person whose claims are satisfied if the company should liquidate.
What determines the market price of common stock?
The market price of common stock is determined by investor expectations about the future of the company. Par value (which is the same as stated value) and book value have no bearing on the market price of the common shares. The definition of Treasury Stock is: A. issued shares which are outstanding B. issued shares which are no longer outstanding
How does the purchase of treasury stock affect the financial statements?
It signifies that a portion of the net assets controlled by the reporting entity are attributable to the ownership interests of outside parties. The effects on the financial statements of the purchase of treasury stock include: a decrease to cash. a decrease to total stockholders' equity.
What are the rights of common stockholders?
Common Stock An Equity security that gives the owner the right to receive dividends, vote on company issues, and vote for the board of directors. The common stockholder is the last person whose claims are satisfied if the company should liquidate.
What is offering of common stock?
Common Stock Offering means the sale and issuance for cash by the Corporation to persons other than the Corporation or any of its subsidiaries after the Original Issue Date of shares of Common Stock (other than any such sales and issuances made pursuant to agreements or arrangements entered into, or pursuant to ...
Which of the following are benefits of common stock ownership?
Three characteristic benefits are typically granted to owners of ordinary shares: voting rights, gains, and limited liability. Common stock, through capital gains and ordinary dividends, has proven to be a great source of returns for investors, on average and over time.
What does common stock give you the right to do?
Common shareholders possess the right to share in the company's profitability and gains from its stock price appreciation. Shareholders may also share in a company's profits by receiving cash or stock payments from the company (i.e., dividends).
What are the features of common stock?
Features of Common Stocks?Dividend Right – Entitled to earn dividends.Asset Rights – Entitled to receive remaining assets in the event of a liquidation.Voting Rights – Power to elect the board of directors.Pre-emptive Rights – Entitled to receive consideration.
What are the benefits of common stock quizlet?
Benefits of owning common stock include:The right to vote.The receipt of dividends.A residual claim to assets at liquidation.Preemptive rights - the rights to purchase newly issued stock before it is available to others.
What are the advantages and disadvantages of common stocks?
The main advantage of this type of share structure is that owners get access to the capital markets, while retaining effective control and potentially warding off hostile takeovers. The disadvantage for investors is lower voting rights and trading volumes in some of these share classes.
Which terms describe common stock?
Which terms describe common stock? Common stock is a negotiable (transferable) security. It is not redeemable with the issuer nor is it callable by the issuer.
What are examples of common stock?
For example, if a company declares a dividend of $10 million and there are 20 million shareholders, investors will receive $0.50 for each common share they own. The other main type of stock is called preferred stock and works a bit differently.
Does common stock pay dividends?
Common stocks may pay dividends, depending on profitability. Preferred stocks' dividends are often higher than common stocks' dividends.
What is common stock?
Common Stock. An Equity security that gives the owner the right to receive dividends, vote on company issues, and vote for the board of directors. The common stockholder is the last person whose claims are satisfied if the company should liquidate. Common stock features.
What rights do common shareholders have?
C. Common shareholders have the right to maintain proportionate ownership in the company, to vote, and to sell their shares without restriction. They do not get to inspect the minutes of executive meetings. Common shareholders have all of the following rights EXCEPT the right to:
What is dividend payment?
The amount and form of payment are determined by the Board of Directors. Dividend payments can take the form of cash; stock dividends; or product dividends. For example, in years past, Procter and Gamble would send a "variety pack" of its products to shareholders in addition to the regular cash dividend.
What is Treasury stock?
The definition of Treasury Stock is: A. issued shares which are outstanding.
Do stockholders have the right to inspect the minutes of board meetings?
C. Common stockholders have the right to vote for the Board of Directors, but they do not have the right to inspect the minutes of Board of Directors meetings. They do have the right to "inspect the books and records" of the company - but this right is limited to inspection of financial reports.
Is a distribution of rights a dividend?
The distribution of "rights" is not a dividend. Rather, it is the "pre-emptive" right of all shareholders to maintain proportionate ownership if the corporation wishes to issue additional shares. The corporation must distribute rights to existing shareholders if it wishes to sell new common shares. Dividend distributions, on ...
Why does the market value of common stock decrease after dividend?
Immediately after the issuance of a stock dividend, the market value per share of common stock for the company should normally: decrease because more shares of stock are now outstanding, but the total market value of all shares remains the same. Identify the similarities between preferred stock and bonds payable.
What does the caption on a stock mean?
After a stock split, the Common Stock caption of stockholders' equity indicates a drop in the par value per share (if appropriate). After a stock split, the total market value of the company's outstanding stock usually does not change.
What is preferred stock and bonds payable?
Identify the similarities between preferred stock and bonds payable. Preferred stock and bonds payable are both usually callable and may be convertible. Dividends (for preferred) and interest (for bonds) both normally represent a fixed claim to income.
Does preferred stock have a maturity date?
Preferred stock has no maturity date; bond principal must be paid at maturity. The number of (authorized/issued/outstanding/treasury) shares is stated in the corporate charter that is filed with the state of incorporation. authorized.
Is preferred dividend a tax expense?
Preferred dividends are not an exp ense and are not deductible for tax purposes; bond interest is an expense and is deductible for tax purposes.F. The issuance of additional shares of common stock to stockholders in proportion to the number of shares each currently owns is referred to as a (scrip/stock/bond) dividend. stock.
