INVESTING IN COMMON STOCK (CHAPTER 5)

By thisqueen9 | Updated: Sept. 2, 2018, 11:14 a.m.

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DPB 6023:
INVESTMENT MANAGEMENT

LECTURER NAME:

PUAN ROSLINA BINTI AMEERUDIN

GROUP MEMBERS:

NUR ANIS ZAYANI BINTI ADAM MALEK
(01DKB16F1015)

NUR AMIRAH AINA BINTI ISMAIL
(01DKB16F1016)

CHAPTER 5:
INVESTING IN COMMON STOCK

CONCEPTS OF COMMON STOCKS
Purchased for potential capital appreciation.
Known as ORDINARY SHARE .

If the market values decline, the share value may fall and dividends are unlikely.
Profit:
- paid dividend
- capital appreciation
- or both

CONCEPTS OF COMMON STOCKS
Shareholders are owners of the business.

CONCEPTS OF COMMON STOCKS
Represents ownership in a corporation.

Have a right for electing a BOD & voting corporate policy.
CHARACTERISTICS OF COMMON STOCK
A
B
CLAIM ON INCOME
CLAIM ON ASSETS
Shareholders are often said to have a residual claim to the income of the business (dividend).
If the company goes bankrupt, common shareholders still get some portion of the assets (after the company paid to the preferred stockholders of the company).
CHARACTERISTICS OF COMMON STOCK
C
VOTING RIGHT
D
LIMITED LIABILITY
Shareholder have the capability of costing the vote while selecting BOD.
Shareholders have limited liability (the portion that have purchased from the stock market is actually the total liability).
CHARACTERISTICS OF COMMON STOCK
PREEMPTIVE RIGHT
1. Allow common stockholders to maintain their proportional ownership in company.

2. Have right but not the obligation to purchase.

E
THANK YOU!

INVESTING IN COMMON STOCK (CHAPTER 5)

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