CHAPTER FIVE COMMON STOCK Practical Investment Management Robert A Strong
COMMON STOCK CHAPTER FIVE Practical Investment Management Robert A. Strong
Corporations, Shares, and shareholder rights People who own stock have an equity interest in the organization If a business has shares of stock, it is organized as a corporation rather than a proprietorship or a partnership The shares of some corporations are closely held, while others are publicly held. The two types of stock are common stock and preferred stock. Strong c5-Common Stock 5-2
5 - 2 Strong C5 – Common Stock ◆ People who own stock have an equity interest in the organization. ◆ If a business has shares of stock, it is organized as a corporation rather than a proprietorship or a partnership. ◆ The shares of some corporations are closely held, while others are publicly held. ◆ The two types of stock are common stock and preferred stock. Corporations, Shares, and Shareholder Rights
Corporations, Shares, and shareholder rights Shareholder rights o the right to receive declared dividends on a pro rata basis ◆ the right to vote Some companies have more than one class of stock the right to maintain ownership percentage The mechanics of the preemptive right are accomplished by a rights offering Strong c5-Common Stock 5-3
5 - 3 Strong C5 – Common Stock ◆ the right to receive declared dividends on a pro rata basis ◆ the right to vote - Some companies have more than one class of stock. ◆ the right to maintain ownership percentage - The mechanics of the preemptive right are accomplished by a rights offering. Shareholder Rights Corporations, Shares, and Shareholder Rights
The Mystique of Dividends: Types of Dividends ◆ cash dividends paid in cash Some firms have an optional dividend reinvestment plan Strong c5-Common Stock 5-4
5 - 4 Strong C5 – Common Stock ◆ cash dividends - paid in cash Some firms have an optional dividend reinvestment plan. The Mystique of Dividends: Types of Dividends
The Mystique of Dividends: Types of Dividends Selected dividend reinvestment plans DISCOUNT FROM FIRM MARKET PRICE Chase Manhattan Bank(CMB, NYse Central Maine Power(CTp Nrse Green Mountain Power (GMP, NYse Hibernia Corp(HIB, NYSE 5%0 York Financial (YFED, NASDAo 10% Strong c5-Common Stock 5-5
5 - 5 Strong C5 – Common Stock The Mystique of Dividends: Types of Dividends Selected Dividend Reinvestment Plans DISCOUNT FROM FIRM MARKET PRICE Chase Manhattan Bank (CMB,NYSE) 5% Central Maine Power (CTP, NYSE) 5% Green Mountain Power (GMP, NYSE) 5% Hibernia Corp. (HIB, NYSE) 5% York Financial (YFED, NASDAQ) 10%