Podcast Beta
Questions and Answers
- Another term for stocks and bonds is
A. equity and debt
B. shares and units
C. voting and nonvoting
D. taxable and tax free
- Which of the following would most likely require shareholder approval?
A. Declaring a dividend
B. Firing the CEO
C. Hiring a new CFO
D. Changing the corporation's name
- Big Company, Inc., an NYSE-listed manufacturer of large objects, has declared a
50-cents-per-share dividend payable next month. Big Company also has options available for trade. The actual ex-dividend date will be declared by
- Which of the following securities would likely provide the greatest potential for capital appreciation?
A. A preferred stock
B. A U.S. Treasury STRIPS
C. A common stock
D. A corporate bond
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- Which of the following is not considered a risk of owning common stock?
A. The shares are transferable.
B. The shares have a guaranteed value.
C. Stocks generate a guaranteed income.
D. Stocks have a high priority if the corporation dissolves.
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Study Notes
Financial Terminology
- Stocks are also known as equity; bonds are referred to as debt.
- Understanding these terms is essential for navigating investment markets.
Shareholder Approvals
- Certain corporate decisions, such as changing the corporation's name, typically require shareholder approval.
- Declaring dividends, hiring or firing executives, usually do not need direct shareholder votes.
Dividends and Ex-Dividend Dates
- Big Company, Inc. announced a 50-cents-per-share dividend, to be paid next month.
- The ex-dividend date, which determines eligibility for the dividend, will be confirmed by the company.
Investment Potential
- Common stocks generally offer the greatest potential for capital appreciation compared to preferred stocks, U.S. Treasury STRIPS, and corporate bonds.
- Investors often seek common stocks for higher growth opportunities.
Common Stock Risks
- Risks associated with owning common stock include uncertainty regarding value and income; there are no guaranteed returns.
- Common stock shares are transferable and have lower priority in corporate dissolution, making them riskier compared to other investments.
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Description
Test your knowledge on the terminology related to stocks and bonds with this quiz. Identify the alternative terms used for stocks and bonds from the options provided.
