Stocks Lecture

PORTFOLIO INVESTMENT:   STOCKS (SHARES)

1. General Description

2. Yield on Shares

3. Basic Key Metrics Of Stock Value

1. GENERAL DESCRIPTION

  Portfolio (financial) investment – investment in various financial instruments like  securities or deposits.         

            LAW OF UKRAINE About  Securities and the Stock Market N 3480, 23.02.2006

   Securities – documents of the established form with relevant requisites that testify  money or other property rights, determine interrelationships between the entity that has issued them and the owner as well as provide carrying out obligations according to the terms of their placement (floating) and the possibility to transfer rights following from these documents to other persons.

A share (also known as "stock" or "equity") is a registered security that certifies property rights of its owner (shareholder) including the right

→ to receive a portion of profit of the joint stock company in the form of dividends;

→ to receive a portion of property of the joint stock company in case of its liquidation;

    → to manage the joint stock company.

        The nominal value of share is set in the national currency. Minimal nominal value of a share may not be less than one kopeck.

       A joint stock company may place shares of two types — common and preferred. 

        Common shares grant to their owners the right to receive a portion of the joint stock company’s profit in the form of dividends, to participate in management of the joint stock company, to receive a portion of property of the joint stock company in case of its liquidation.   Common shares may not be convertible into preferred shares or other securities.

           Preferred shares grant to their owners privileged rights versus owners of common shares to receive a portion of the joint stock company’s profit in the form of dividends and to receive a portion of property of the joint stock company in case of its liquidation as well as the right to participate in management of the joint stock company in cases provided by the statute and the law that regulates establishment, operation and termination of joint stock companies.     The percentage of preferred shares in the statutory capital of a joint stock company may not exceed 25%.

      Exercise #1.

True or False?

1. Stock is

a) debt security;      

    b) share security;

c) the company's debt to the stockholder;

d) the stockholder debt to the company.

 2. Stock is meant

    a) the acquisition of share of the company;

    b) granting loan to the company.

 3. Stockholder is

     a) the creditor of the company; f no debt creditor relation

     b) the debtor of the company; f

     c) Co-owner of the company.  t

 4. Main features of stock:

a) fixed profitability;f

b) no fixed income is granted; t