SIE Exam State Farm

Define Stock They are also called equities & represent ownership in companies and are issued by corporations. Bonds 1. Also called debt or sometimes notes. They can be issued by a corporation or government entity. The owner is the lender issuer is the debtor. Characteristics of Common Stock 1. All companies issue common stock. 2. Ownership position 3. Most Junior all securities. Why Purchase Common Stock? 1. Capital Gains (BUY LOW SELL HIGH) 2. Dividends. Growth Stock Mainly used for companies wanting to secure capital with the idea of getting a return on investment. Income Stock Utility companies or gas or companies that have a history of paying dividends Rights of Common Stockholders 1. Voting Rights 2. Transfer of ownership 3. Books and Records. What is the Normal Voting Method? Statutory Dividends. How do they Work? 1. Dividends are paid through the companies profits. 2. The board of directions declares the dividends What is a Warrant 1. Long Term 2. Usually attached to bond offering. -marketability -lower interest rate on bonds 4. Exercise, sell them or let them expire.