CSC Chapter 8: Equity Securities - Common and Preferred Shares

callable preferred

A preferred share that may be redeemed upon due notice by the security’s issuer.

dividend reinvestment plan

The automatic reinvestment of shareholder dividends in more shares of the company’s stock.

arrears

Interest or dividends that were not paid when due but are still owed.

dollar cost averaging

Investing a fixed amount of dollars in a specific security at regular set intervals over a period of time with a goal of reducing average cost paid per unit.

pari passu

A legal term meaning that all securities within a series have equal rank or claim on earnings and assets. Usually refers to equally ranking issues of a company’s preferred shares.

stock split

An increase in a corporation’s number of shares outstanding without any change in the shareholders’ equity or market value.

float

The part of the issued shares that are outstanding and available for trading by the public, and not held by company officers, directors, or investors who hold a controlling interest in the company.

street certificate

Securities certificates that are registered in the name of the securities firm, rather than the beneficial owner.

restricted shares

Shares that participate in a company’s earnings and assets (in liquidation), as common shares do, but generally have restrictions on voting rights or else no voting rights.

retraction

A preferred share that grants the holder the option under specified conditions to force the issuer to redeem the shares.

soft retraction

A retraction feature that allows the issuer to redeem retracted shares either for cash or common shares.

capital gain

What results when an investor sells a security for more than its purchase price?

stock average

The arithmetic average of the current prices of a group of stocks designed to represent the overall market or some part of it.

odd lot or broken lot

A number of shares which is less than a standard trading unit. Usually refers to a securities trade for less than 100 shares.

cum dividend

If you buy shares during this period of time, you will receive an upcoming already-declared dividend.

standard trading unit

The trading unit which has uniformly been decided upon by the stock exchanges; in most cases it is 100 shares, but this can vary depending on the price of the stock.

stock index

A time series of numbers used to calculate a percentage change of a portfolio of shares over any period of time.

ex-dividend

The period of time after the cum dividend period where, when a person purchases a common or preferred share, they are not entitled to the declared dividend payment.