1
par value = face value =_____
nominal value
Coupon rate of Bond
The rate of interest paid on the face value of the bond, expressed as a percentage
Difference between Corporate and Municipal bonds?
Corporate bonds: Bonds issued by companies
Municipal bonds: Bonds issued by municipalities
_______ =Liabilities + _______
Assets, Shareholders’ Equity
Stocks also are called “_______”
equities
Total number of votes of each shareholder = No. of shares owned x ____________
No. of directors to be elected
Number of shares to guarantee a seat on the Board = 𝟏∕〖(𝑵+𝟏)〗 percent plus 1 share. What is N?
N is number of directors up for election
Are dividends received by individual shareholders taxable?
YES
A corporation paid dividends to its shareholders, how tax will be calculated for this operation?
Tax will not paid because of company paid dividends
Which stockholders have priority over common stockholders if the company goes bankrupt and its assets are liquidated?
Owners of preferred stocks
Why corporations buy and issue stocks?
*Issuing stocks
-To pay off debt
-To launch new products
-To expand into new markets or regions
-To enlarge facilities or building new ones
*Buying stocks
-To gain capital appreciation – when a stock rises in price
-To get dividend payments
-To obtain voting rights at shareholders meetings / control of the company (“strategic investment”)
Describe Stock Split
A stock split is when a company divides its stock into multiple shares, effectively lowering the price of each share without changing the company's market value.
Can corporation become bankrupt because of not paying divident obligations? Is it a liability that must be paid?
A dividend is not a liability: A corporation cannot become bankrupt because of nonpayment of dividends
Blue-chip stocks?
Shares in large, well-known companies with a solid history of growth
Stock issuance results in _____ to the shareholders _____ of the ______
credit, equity, balance sheet
Difference between JSC and LLC?
A JSC is a business entity owned by its investors and each investor of JSC owns a share(=certificate of ownership) of the company based on the amount they invested.
Shareholders of a JSC have unlimited liability for their companies’ debts
A LLC is a business structure where the owners of which have limited liability for the company’s liabilities in the event the business fails
To be included in the quotation list of (listed on) the stock exchange, an LLC needs to be reorganized into a JSC.
To issue 100,000 shares of par-stocks with a par value of UZS 1/share at UZS 15/share
Debit:
Credit:
Credit:
Debit: Cash UZS 1,500,000 (100,000 x UZS 15)
Credit: Common stock UZS 100,000
Credit: Additional paid-in capital UZS 1,400,000
Bond prices are inversely correlated with ______
interest rates
Traditional financial markets consists of ____ and _____
Short-term financial markets and Long-term financial markets
Staggering makes it more ______ for minority shareholder to elect a director because there are ______ directors to be elected at one time
difficult, fewer
Describe Proxy voting
A proxy: A grant of authority by a shareholder allowing another individual to vote his/her shares
“Proxy fight”: If shareholders are not satisfied with management, an “outside” group of shareholders can try to obtain votes via proxy in an attempt to replace management by electing enough directors
Describe Classes of stock
Creation of classes of common stocks with unequal voting rights to maintain control of the firm
In principle, NYSE does not allow companies to create classes of listed common stocks with exceptions
Which activity can increase liquidity (the ability to trade the stock easily) and trading volume of stock?
Stock Split
Describe Preemptive right
The right to share proportionally in any new stock sold. “Preemptive right”
Preemptive right: a company wishing to sell stock must first offer it to existing stockholders before offering to the general public to give them the opportunity to protect their proportionate ownership in the corporation