#1
What does the term 'IPO' stand for in the context of corporate finance?
Initial Public Offering
ExplanationIt represents the first time a company's stock is offered to the public for investment.
#2
What is the primary purpose of issuing common stock in a corporation?
To raise capital through investment from shareholders
ExplanationCommon stock issuance aims to secure funds by selling ownership stakes to shareholders.
#3
What is a 'dividend' in the context of stocks?
A portion of a company's earnings distributed to shareholders
ExplanationIt is a share of profits paid regularly to shareholders as a return on their investment.
#4
What does the term 'market capitalization' refer to in the stock market?
The total value of a company's outstanding shares
ExplanationMarket cap is the valuation of a company determined by multiplying its stock price by the number of outstanding shares.
#5
What does the term 'stock option' refer to?
A contract that gives the holder the right to buy or sell a specific number of shares at a predetermined price within a specified period
ExplanationIt grants the option holder the flexibility to trade shares at a predetermined price within a set timeframe.
#6
What is the significance of the 'par value' of a stock?
Face value of a stock set by the corporation
ExplanationIt represents the nominal value assigned to a stock by the issuing company.
#7
What does the term 'stock buyback' refer to in corporate finance?
A company repurchasing its own shares from the market
ExplanationIt involves a company buying back its outstanding shares, reducing the number of shares available in the open market.
#8
What is the 'ex-dividend date'?
The date on or after which a buyer of a stock is not entitled to receive the next dividend payment
ExplanationInvestors purchasing shares on or after this date won't receive the upcoming dividend payment.
#9
What is a 'stock split'?
A corporate action that increases the number of outstanding shares while proportionally decreasing the share price
ExplanationIt involves dividing existing shares into multiple shares, adjusting both quantity and price.
#10
What is a 'proxy statement' in the context of corporate stock?
A document providing information for shareholders who cannot attend a meeting and wish to vote by proxy
ExplanationIt allows absent shareholders to authorize another person to vote on their behalf.
#11
What is the role of a 'transfer agent' in corporate stock management?
To manage the transfer of stocks between shareholders
ExplanationTransfer agents facilitate the smooth exchange of stock ownership between shareholders.
#12
What is the 'book value' of a stock?
The value of a company's stock as recorded on its balance sheet
ExplanationIt reflects the net worth of a company's common equity, calculated from its financial statements.
#13
What is the role of a 'stock registrar'?
To maintain records of shareholders and their holdings
ExplanationStock registrars keep accurate records of the ownership and transactions of a company's shares.
#14
What is 'insider trading'?
The illegal buying or selling of stocks based on non-public information
ExplanationIt involves trading stocks using confidential information not yet made available to the public.