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DeHan Ch. 7 Vocab
Finance Ch. 7 Vocab
| Term | Definition |
|---|---|
| Cumulative Dividends | A protective feature on preferred stock that requires preferred dividends previously not paid to be disbursed before any common stock dividends can be paid. |
| Call Premium | The amount in excess of par value that a company must pay when it calls a security. |
| Income Stocks | Stocks of firms that traditionally pay large, relatively constant dividends each year. |
| Growth Stocks | Stocks that generally pay little to no dividends so as to retain earnings to help fund growth opportunities. |
| Proxy | A document giving one person the authority to act for another; typically it gives him or her the power to vote shares of common stock. |
| Preemptive Right | A provision in the corporate charter or bylaws that gives existing common stock holders the right to purchase new issues of common stock on a pro rata basis. |
| Classified Stock | Common stock that is given a special designation, such as Class A, Class B, and so forth, to meet special needs of the company. |
| Founders' Shares | Stock, owned by the firm's founders , that has sole voting rights but generally pays out only restricted dividends (if only) for a specified number of years. |
| American Depository Receipts (ADRs) | "Certificates" created by organizations such as banks; represent ownership in stocks of foreign companies that are held in trust by a bank located in the country where the stock is traded. |
| Euro stock | Stock traded in countries other than the home country of the company, not including the United States. |
| Yankee Stock | Stock issued by foreign companies and traded in the United States. |
| Market Price (value) | The price at which stock sells in the market. |
| Intrinsic (theoretical) Value | The value of an asset that, in the mind of a particular investor, is justified by the facts; it can be different from the asset's current market price, book value, or both. |
| Growth Rate (g) | The expected rate of change in dividends per share. |
| Required Rate of Return | The minimum rate of return on a common stock that stockholders consider acceptable. |
| Dividend Yield | The expected dividend divided by the current price of a share of stock. |
| Capital Gains Yield | The change in price during a given year divided by the price at the beginning of the year. |
| Expected Rate of Return | The rate of return that an individual stockholder expects to receive on a common stock. It is equal to the expected dividend yield plus the expected capital gains yield. |
| Constant Growth Model | Also called the Gordan Growth Model, it is used to find the value of a stock that is expected to experience constant growth. |
| Non constant Growth | The part of the life cycle of a firm in which its growth is either much faster or much slower that that of the economy as a whole. |
| P/E Ratio | The current market price of a stock divided by the earnings per share. |
| Economic Value Added (EVA) | An analytical method that seeks to evaluate the earnings generated by a firm to determine whether they are sufficient to compensate the suppliers of funds-both the bondholders and the stockholders. |
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sfrase
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