Investment and Securities Flashcard

Front

What is preferred stock?

Back

A type of equity security that typically provides dividends and has priority over common stock in the event of liquidation, but usually does not have voting rights.

Front

What is a key feature of preferred stock compared to bonds?

Back

It is perpetual with no maturity date.

Front

What are the two main types of equity securities?

Back

Common stock and Preferred stock.

Front

What are common stockholders entitled to?

Back

Voting rights in corporate decisions.

Front

What is a stock split?

Back

A corporate action that increases the number of shares outstanding while reducing the share price, keeping the overall value of the company the same.

Front

What happens to the value of an investor's holdings after a stock split?

Back

The value remains the same.

Front

What is the primary reason a brokerage firm might sell out a customer's securities?

Back

Due to non-payment.

Front

What is a callable bond?

Back

A bond that can be redeemed by the issuer before its maturity date.

Front

What is the difference between common stock and preferred stock?

Back

Common stock typically has voting rights and variable dividends, while preferred stock usually has fixed dividends and no voting rights.

Front

What is a dividend?

Back

A portion of a company's earnings distributed to shareholders.