Types of Stock
This stock is not publicly traded, owned by private investors.
Private Stock
Preferred stock with a stated face value that is used with the specified dividend percentage to determine the annual dollar dividend
Par-value preferred stock
An approach to dividend valuation that assumes a constant, nongrowing dividend stream
Zero-growth model
Includes all borrowing incurred by a firm, including bonds, and is repaid according to a fixed schedule of payments
Debts
This stock is able to be invested by anybody.
Public Stock
Preferred stock with no stated face value but with a stated annual dollar dividend
No-par preferred stock
An approach that assumes dividends will grow at a constant rate, but a rate less than the required return.
Constant-growth dividend model
Funds provided by the investors or stockholders that are repaid subject to the firm's performance.
Equity
Owned by a small group of investors, usually private companies
Closely Owned Stock
Preferred stock for which all unpaid dividends in arrears, along with the current dividend, must be paid before dividends can be paid to common stockholders.
Cumulative
A dividend valuation approach that allows for a change in the dividend growth rate.
Variable-growth dividend model
Financial instruments that allow stockholders to purchase additional shares at a price below the market price, in direct proportion to their number of owned shares.
Rights
Owned by many individual or institutional investors.
Widely Owned Stock
Preferred stock for which unpaid dividends do not accumulate
Noncumulative
A model that determines the value of an entire company as the present value of its expected free cash flows.
Free cash flow valuation model
Shares of common stock that have been put into circulation; the sum of outstanding shares and treasury stock
Issued Shares
Issued shares of common stock held by the firm; often these shares have been repurchased by the firm
Treasury Stock
A feature of convertible preferred stock that allows holders to change each share into a stated number of shares of common stock.
Conversion Feature
A common name for the constant-growth dividend model that is widely cited in dividend valuation
Gordon-growth dividend model
A reduction in each previous shareholder's fractional ownership resulting from the issuance of additional shares of common stock.
Dilution of Ownership