Question

Define these terms

Authorized share capitalb.) Authorized but not Issued sharesc.) Treasury sharesd.) Cumulative voting method for the BODe.) Cumulative preferred stockf.) Sinking fundg.) Subordinated debenturesh.) Secured bondi.) Callable bondj.) Zero-coupon bondk.) Funded debtl.) Protective covenantsm.)Rights offeringn.) Warrantso.) Convertible bonds

Answer 1

a) Authorized share capital - It the amount of capital that a company is authorized to issue to shareholders.

b) Authorized but not Issued shares- It is the capital that the company has not issued out of total authorized share capital.

c) Treasury shares- These are the shares brought by the company from the open market.

d) Cumulative voting method for the BOD- It is the method by which the minority shareholders represent companies board of directors.

e)  Cumulative preferred stock- These are the type of preferred stock whose divided gets accumulated in case it is not paid during the year.

f.) Sinking fund- It is a fund created out of the revenue over a period of time for future capital expenditure or long debt repayment.

g) Subordinated debentures-These are the debentures whose preference of repayment in case of dissolution of the company second to primary debentures.

h) Secured bond- Bonds which are secured by pledging a specific asset.

i)  Callable bond- It is that bond that gives the option to the company to redeem before maturity.

j)  Zero-coupon bond- These are those bonds who are repaid at face value. They are issued at discount.

k.) Funded debt- These are those debts that are repaid in a long term period.

l) Protective covenantsm- Its an agreement between borrower and company, to restrict buyers from performing certain activities.

m)Rights offering-It is a right to issue shared to existing shareholder first before it is open for issue in the market.

n) Warrants- They give the option to buy certain shares at pre-determined price before the expiry date.

o)Convertible bonds- These are the bond which gives the option to bondholder to convert them into stock.

Hi mate,

I would be grateful to you if you can provide a thumbs up and write one beautiful comment. It will improve my rating and let me continue my journey here.

In case of doubt, please comment. I will consider myself fortunate if I can help you.

All the best for your bright future.

Be safe from the corona. Wear a mask before going out and wash hands frequently especially before touching the face