SECTION 2.1

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

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.

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.

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.