ACC 212 - FINMAR 2ND EXAM (L1)

2ND EXAM REVIEWER IN FINMAR

STOCK MARKETS

where public corporations efficiently and cheaply get their needed funds by selling to the supplier of funds (investors) their equity securities. This process allows investors to buy shares in a company, providing capital for growth in exchange for potential future profits.

PRIMARY STOCK MARKETS

are the markets where new securities are issued and sold for the first time, allowing companies to raise capital directly from investors.

UNDERWRITERS SPREAD

Difference between the gross proceeds and the net proceeds. The compensation for the expenses and risks incurred by the investment bank with the issues.

PREEMPTIVE RIGHT

The right of the existing shareholders in which new shares must be offered to existing shareholders first in such a way that they can maintain their promotional ownership int he corporations.

SEASONED OFFERING

Wherein the firm whose shares are already traded in the secondary markets wishes to sell additional new issue shares.

SECONDARY MARKETS

Are markets in which the stocks will be traded (bought and sold by investors) after they have been issued in the primary markets.

SECONDARY MARKETS

NYSE, NASDAQ, and PSE

Receiving dividends

This happens when the company where the investor invested his money declares dividends to its shareholders.

CAPITAL APPRECIATION

This happens when the investor sells the shares, he is holding at a price higher than his purchase price, therefore realizing a profit.

INVESTORS

Referred to as stockholders or shareholders, are those who own shares of stock of a publicly listed company.

TRADITIONAL

Those who assign a licensed salesman to handle the investor’s account and take orders via a written instruction or a phone call.

ONLINE

Those whose main interface is the internet where clients execute their orders and access market information online.

SECURITIES AND CLEARING CORPORATIONS OF THE PHILIPPINES (SCCP)

A wholly owned subsidiary of the Exchange. It was established to ensure the orderly settlement of equity trades executed at the PSE.

SETTLEMENT BANKS

Accept deposits of funds for payment of securities bought, confirm payments of due clearing obligations to the clearing house,

COMMON STOCKS (ORDINARY SHARE)

PREFFERED STOCKS (PREFERENCE SHARES)

Stocks according to rights

CLASS A

Shares that Filipino investors can trade

CLASS B

Shares that can be traded by both Filipino and foreign investors.

FINANCIAL SECTOR

includes companies engaged in banking, investments, and finance.

INDUSTRIAL SECTOR

Includes companies involved in the following: Electricity, Energy, Power, and Water, Food, Beverage, and Tobacco, Construction, Infrastructure, and Allied Services, Chemicals and Diversified Industrials

HOLDING FIRMS SECTOR

Includes companies involved in the following: Electricity, Energy, Power, and Water, Food, Beverage, and Tobacco, Construction, Infrastructure, and Allied Services, Chemicals and Diversified Industrials

PROPERTY SECTOR

Companies involved in land and property developmnet

SERVICES SECTOR

companies involved in the following: Media, Telecommunications, Information Technology, Transportation Services, Hotel and Leisure, Education, and Diversified Services

MINING AND OIL SECTOR

companies engaged in mineral extraction, oil exploration, extraction, and production

BLUE CHIP STOCKS

shares of well-established and financially sound companies that have demonstrated their ability to pay dividends in both good and bad times.

INCOME STOCKS

shares of those companies with good dividend payment history due to steady profits. Since they are stable, income stocks generally have a lower level of volatility.

GROWTH STOCKS

called “glamour stocks”, are shares of corporations whose earnings are expected to grow at an above-average rate relative to the market.

DEFENSIVE STOCKS

shares that provide regular dividends and stable earnings, regardless of the overall condition of the stock market.

CYLCIAL STOCKS

those sensitive to business conditions or cycles strongly tied with the economy’s performance. These companies produce or offer services that are low in demand during slowdown and increase when business peaks

SPECULATIVE STOCKS

those that rise quickly when economic growth is strong and falls rapidly when growth is slowing down. Very risky due to its volatility.

PHILIPPINE STOCK EXCHANGE

stock exchange in the Philippines and considered as one of the oldest stock exchanges in Asia, operating since 1927