Types of Stock – a proportional part of a corporation’s capital represented by the number of equal units (or shares) owned, granting the holder the right to participate in the company’s general management and to share in its net profits or earnings

stock:
n. (14c)

4. A proportional part of a corporation’s capital represented by the number of equal units (or shares) owned, and granting the holder the right to participate in the company’s general management and to share in its net profits or earnings <Julia sold her stock in Pantheon Corporation>. See SHARE, n. (2). Cf. security (4).

Types of Stock:

adjustable-rate preferred stock. (1983) Preferred stock whose dividend is periodically changed according to changes in a benchmark interest rate, such as that of Treasury bills. –Abbr. ARPS.

> assented stock. (1890) Stock that an owner deposits with a third person according to an agreement by which the owner voluntarily accepts a change in the corpora tion’s securities.

b assessable stock. (1887) Stock that is subject to resale by the issuer if the holder fails to pay any assessment levied on it.

b authorized stock. See capital stock (1).

b bailout stock. (1956) Nontaxable preferred stock issued to stockholders as a dividend. O Bailout stock is issued to gain favorable tax rates by distributing corporate earnings at capital gains rates rather than by distributing dividends at ordinary income rates. This practice is now prohibited by the Internal Revenue Code. IRC (26 USCA) § 306.

> barometer stock. (1921) A stock whose price fluctuates according to market conditions; an individual stock considered to be indicative of the strength of the market in general. Also termed bellwether stock.

> bearer stock. (1922) Rare. Stock that has no recorded ownership information so the physical bearer of the stock certilicate is presumed to be the owner,

b blank stock. (1930) Securities. Stock with voting powers and rights set by the issuer’s board of directors after the

stock has been sold. I ‘>blue-chip stock. See BBUE CHIP.

> bonus stock. (1891) A stock share that is issued for no consideration, as an enticement to buy some other type or class of security. 0 It is considered a type of watered

stock. -Also termed bonus share.

> book-value stock. (1975) Stock offered to executives at a book-value price, rather than at its market value. 0 The stock is offered with the understanding that when its book value has risen, the company will buy backthe

. stock at the increased price or will make payments in stock equal to the increased price.

b callable preferred stock. (1936) Preferred stock that may be repurchased by the issuing corporation at a prestated price, usu. at or slightly above par value.

> capital stock. (16c) l. The total number of shares of stock that a corporation may issue under its charter or articles of incorporation, including both common stock and preferred stock. 0 A corporation may increase the amount of capital stock if the shareholders approve an amendment to its charter or articles of incorporation. -Also termed authorized stock; authorized capital stock; authorized stock issue; authorized shares, 2. The total par value or stated value of this stock; CAPITALIZATION (4). 3. See common stock.

v cheap stock. Stock or stock options issued to the issuer’s directors, employees, consultants, promoters, and the like at a price lower than the pubhc-oifering price up to 12 months before the offering.

common stock. (1888) A class of stock entitling the holder to vote on corporate matters, to receive dividends after other claims and dividends have been paid (esp, in preferred shareholders), and to share in assets upon liq uidation. 0 Common stock is often called capital stock if it is the corporation’s only class of stock outstand ing. -Also termed ordinary shares. Cf. preferred stock,

b convertible stock. See convertible security under SECURITY (4).

> corporate stock. (1819) An equity security issued by a corporation.

> cumulative preferred stock. (1903) Preferred stock that must receive dividends in full before common share holders may receive any dividend. 0 If the corpora tion omits a dividend in a particular year or period, it is carried over to the next year or period and must be paid before the common shareholders receive any

payment. Also termed cumulative stock; cumulative preference share.

> deferred stock. (18c) Stock whose holders are entitled to dividends only after the corporation has met some other specified obligation, such as the discharge of a liability or the payment of a dividend to preferred shareholders.

> discount stock. (1919) A stock share issued for less than par value. 0 Discount stock is considered a type of watered stock, the issuance of which may impose liability on the recipient for the difference between the par value and the cash amount paid. -Also termed discount share.

> donated stock. (1909) Stock donated to a charity or given to a corporation by its own stockholders, esp. for resale.

> equity stock. (1934) Stock of any class having unlimited dividend r ightS. regardless of whether the stock is

. preferred.

> floating stock. (1852) Stock that is offered for sale on the open market and that has not yet been purchased; the number of outstanding shares available for trading.

> full-paid stock. (1866) Stock on which no further payments can be demanded by the issuing company. Also termed paid-up stock. ’

> glamour stock. See growth stock (2).

> growth stock. (1957) 1. Stock issued by a growth company. 0 Because a growth company usu. reinvests a large share of its income back into the company, growth stock pays relatively low dividends, though its price usu. has a relatively high appreciation in market value over time. 2. Stock that has produced or is expected to produce above-average returns and usu. receives small or no dividends. Also termed glamour stock.

r guaranteed stock. (1850) Preferred stock on which a dividend is guaranteed by someone (usu. a parent corv poration) other than the issuer.

p guarantee stock. (1839) A fixed, nonwithdrawal investment in a building-and-loan association. 0 This type of stock guarantees to all other investors in the associa’ tion a fixed dividend or interest rate. See BUILDING-AND’ LOAN ASSOCIATION.

guaranty stock. (1854) A savings-and-loan association’s Stock yielding dividends to the holders after dividends have been paid to the depositors.

,half-stock, n. Stock with 50% of the normal par value. , hot stock. See hot issue under ISSUE (2). r inactive stock. (1934) A low-volume stock.

yincome stock. (1958) A stock with a historfl of high yields or dividend payments (e.g., public uti ities and well-established corporations).

7 inscribed stock. (1874) Stock for which the owner’s name is recorded, and only the recorded owner is entitled to ownership rights. 0 Formerly, the owner’s name was inscribed on a certificate, but now ownership records are usu. electronic.

y issued stock. Capital stock that has been authorized

and sold to subscribers, but may be reacquired, such as treasury stock. ‘

p joint stock. Capital invested in an unincorporated business and divided into shares proportionate to the size of each investment.

y letter stock. See restricted security under SECURITY (4). > listed stock. See listed security under SECURITY (4). y margin stock. See marginable security under SECURITY

(4).

> nonassessable stock. (1887) Stock owned by a holder whose potential liability is limited to the amount paid for the stock and who cannot be charged additional funds to pay the issuer’s debts. 0 Stock issued in the United States is usu. nonassessable.

v noncumulative preferred stock. (1892) Preferred stock that does not have to be paid dividends that are in arrears. 0 Once a periodic dividend is omitted, it will not be paid. Also termed noncumulative stock.

> nonparticipating preferred stock. (1926) Preferred stock that does not give the shareholder the right to additional earnings usu. surplus common-stock dividends beyond those stated in the preferred contract.

r nonvoting stock. (1912) Stock that has no voting rights under most situations.

b no-par stock. (1920) Stock issued without a specific value assigned to it. 0 For accounting purposes, it is given a legal or stated value that has little or no connection to the stock’s actual value. Sometimes shortened to no par. Also termed no-par-value stock.

5 outstanding stock. (1847) Stock that is held by investors and has not been redeemed by the issuing corporation. Also termed outstanding capital stock; shares outstanding.

> paid-up stock. See full-paid stock.

5 participating preferred stock. (1926) Preferred stock whose holder is entitled to receive stated dividends and to share with the common shareholders in any additional distributions of earnings.

‘ participation stock. (1927) Stock permitting the holder to participate in profits and surplus.

’ par-value stock. (1856) Stock originally issued for a fixed value derived by dividing the total value of capital stock by the number of shares to be issued. 0 The par

value does not bear a necessary relation to the actual stock value because surplus plays a role in the valuation.

> penny stock. (1921) An equity security that is not traded in established markets, represents no tan ible assets, or has average revenues less than required or tr ding on an exchange. 0 Typically, a penny stock is highly specu‘ lative and can be purchased for ess than $5 a s are.

> performance stock. See glamour stock.

b phantom stock. (1959) Imaginary stock that is credited to a corporate executive account as part of the execu

tive’s compensation package. See PHANTOM srocx PLAN.

> preferred stock. (1848) A class of stock giving its holder a preferential claim to dividends and to corporate assets upon liquidation but that usu. carries no

voting rights. –Also termed preference shares; preferred shares. Cf. common stock.

> premium stock. (1858) Stock that carries a premium for trading, as in the case of short-selling.

> prior preferred stock. (1938) Preferred stock that has preference over another class of preferred stock from the

same issuer. 0 The preference usu. relates to dividend payments or claims on assets.

> public stock. 1. See public security under SECURITY (4). 2. Stock of a publicly traded corporation.

b reacquired stock. See treasury stock.

b redeemable stock. (1889) Preferred stock that can be called by the issuing corporation and retired.

> registered stock. See registered security under SECURITY (4). .

> restricted stock. See restricted security under SECURITY (4). .

> retired stock. See treasury Stock.

> special stock. Hist. Corporate stock that guarantees investors an annual dividend and giVes them creditor status to the extent that dividends have become payable. 0 In contrast, preferred-stock holders’ claims for dividends payable are secondary to creditors’ claims. Special stock was statutorily authorized only in Massachusetts.

> subscribed stock. (1826) A stockholder’s equity account showing the capital that will be contributed when the subscription price is collected. See SUBSCRIPTION (2).

> tainted stock. Stock owned or transferred by a person disqualified from serving as a plaintiff in a derivative action. 0 A good-faith transferee is also disqualierd from filing a derivative action.

> treasury stock. (1891) Stock issued by a company but then reacquired and either canceled or held. 0 Some states have eliminated this classification and treat such stock as if it is authorized but unissued. -Also termed

treasury security; treasury share; reacquired stock; retired stock.

r unissued stock. (1879) Stock that is authorized by the corporate charter but not yet distributed.

> unlisted stock. See unlisted security under SECURITY (4).

p volatile stock. (1873) Stock subject to wide and rapid fluctuations in price. -Also termed yo-yo stock.

p voting stock. (1894) Stock that entitles the holder to vote in the corporation’s election of directors and on other

matters that are put to a vote. Also termed voting security.

p» watered stock. (1869) Stock issued for less than par value.

p whisper stock. (1986) The stock of a company that is rumored to be the target of a takeover attempt.

p yo-yo stock. See volatile stock. stock acquisition. See SHARE ACQUISITION.

stock-appreciation right. (usu. pl.) (1974) A right, typically granted in tandem with a stock option, to be paid the option value (usu. in cash) when exercised alon with the simultaneous cancellation of the option. Ab r. SA R.

stock association. See joint-stock company under COMPANY. stock attribution. See ATTRIBUTION (3).

stock bailout. A stock redemption in the form of a preferred stock dividend.

stock/bond power. See STOCK POWER.

stock bonus plan. (1933) A special type of profit-sharing plan in which the distribution of benefits consists of the employer-company’s own stock. Abbr. SBP.

stockbroker. (18c) Someone who buys or sells stocks and bonds as an agent for others. Also termed account executive; account representative.

> street stockbroker. A stockbroker who, not being a member of a stock exchange, carries out the orders of others by transactions in the streets, or by going from ofiice to office. -Often shortened to street broker or curbstone broker. Also termed curbstone stockbroker.

stock buyback. See REDEMPTION (3).

stock certificate. (1863) An instrument evidencing ownership of shares of stock; specif., an oiiicial document showing that one owns shares in a company. -Also termed certijicate of stock; share certificate.

> face-amount certificate. (1940) l. A certificate, investment contract, or other security representing an obligation by its issuer to pay a stated or determinable sum, at a fixed or determinable date or dates more than 24 months after the date of issuance, in consideration of the payment of periodic installments of a stated or determinable amount. +Also termed face-amount certijicate of the installment type. 2. A security representing a similar obligation on the part of the issuer of a faceamount certificate, the consideration for which is the payment of a single lump sum. See 15 USCA § 80a-2(a) (15).. ._.. Also termed fully paid face-amount certificate.

v periodic-payment-plan certificate. (1955) A certificate, investment contract, or other security providing for a series of periodic payments by the holder and representing an undivided interest in certain specified securities or in a unit or fund of securities purchased wholly or partly with the proceeds of those payments. 0 The term also includes an security whose issuer is also issuing the certificates escribed above and whose holder has substantially the same rights and privileges as those holders have upon completing the periodic payments for rhich the securities provide. See 15 USCA § 80a-2(a) (27 .

stock clearing. (1895) The actual exchange of money and stock between buyer and seller, typically performed by a clearing corporation.

arin corporation. (I924) A p lxdmngc au nldiery that is a (eon i ties deliveries and payments betwce

t it control. (1941) A system of love 3 l; which a business m int ins perpe y

inventory stock corporation. Qee t on run A i I:

stock dividend. 8e: mvnwm: stock enhange. See set LIIIIP n! n r

stock (or assets exchange (l9 1) i r r A merger in which one corpor “I n r t transfers all or most of its assets to which then distributes shares oliis own I

solvmg corporation’s shareholders stock for stock exchange. See stock swap stockholder. See SHAREHOLDER. stockholder derivative suit. See DERIVATIvr Acr

stockholder of record. (1886) The person who Is I s d the issuer’s books as the owner of stock on the re date. -Also termed shareholder of record, holder record; owner of record; record owner. See record do ¢ under DATE.

stockholders’ equity. See OWNERs’ EQUITY.

stockholder’s liability. See shareholder’s liability under LIABILITY.

stock index. An official public list of stock prices. stock insurance company. See INSURANCE COMPANY.

stock in trade. (18C) 1. The inventory carried by a retail business for sale in the ordinary course of business. 2. The tools and equipment owned and used by a person en ed in a trade. 3. The equipment and other items need: to run a business.

stock issue. See ISSUE (2). stock-jobber. See IOBBER (2).

stockjobbing, n. (17c) The business ofdealing in stocks or shares; esp., the buying and selling of stocks and bonds by jobbers who operate on their own account. -Also

termed stockjobbery. stock-law district. See DISTRICT. stock life-insurance company. See INSURANCE COMPANY. stock manipulation. See MANIPULATION. stock market. 1. See MARKET (5). 2. See MARKET (6). stock merger. See MERGER (8). stock note. See NOTE (1).

stock option. (1888) 1. An option to buy or sell a speuls quantity of stock at a designated price for a specmed period regardless of shifts in market value during the period. 2. An option that allows a corporate employee to buy shares of corporate stock at a fixed price or within a iixed period. 0 Such an option is usu. granted as a form of compensation and can qualify for special tax treat. ment under the Internal Revenue Code. -Also termed share option; securities option; (in sense 2) employee stock option; incentive stock option (ISO).

p nonqualified stock option. (1961) A stock-option plan that does not receive capital-gains tax treatment, thus

allowing a person to buy stock for a period (often te years) at or below the market price. Abbr. NQ‘IO

, qualified stock option. (1957) A now rare stock 0 a plan that allows a person to buy stock for a period often five years) at the market price, the stock being subject 10 capital-gains tax treatment.

stock-option contract. See CONTnAeT. stockparking, n. See PARKING (2).

StOCk power. A power of attorney permitting p r om other than the owner, to transfer ownershi of c r ty to a third party. -Also termed stock/ban power

stack-purchase plan. (1927) An arrangement by w an employer corporation allows employees to p re shares of the corporation’s stock.

stOCk redemption. See REDEMPTION (3).

stack-redemption agreement. (1953) An agreement between a corporation’s individual owners and the corpo ration itself, whereby the corporation agrees to purchase (i.e., redeem) the stock of a withdrawing or deceased owner. -Often shortened to redemption agreement. –Also termed stock-retirement agreement.

stock repurchase. See REDEMPTION ( 3).

stock-repurchase plan. (1960) A program by which a cor-v poration buys back its own shares in the open market, usu. when the corporation believes the shares are under» valued. ,

stock-retirement agreement. See STOCK-REDEMPTION AGREEMENT.

stock right. See SUBSCRIPTION RIGHT.

stocks, n. (14c) A punishment device consisting of two boards that together form holes for trapping an offender’s feet and hands. -Formerly also termed cippi. Cf. BILBOES (1); PILLORY.

stock sale. Mergers’e’yv acquisitions. A takeover in which the acquiring corporation buys stock directly from the target corporation’s shareholders until it controls all or a majority Of the target’s stock.

stock split. (1955) The issuance of two or more new shares in exchange for each old share without changing the proportional ownership interests of each shareholder; specif., readjustment of a corporation’s financial plan whereby each existing share of stock is split into a specified number of new shares as determined by corporate management. 0 For example, a 3-for-1 split would give an owner of 100 shares a total of 300 shares, or 3 shares for each share previously owned. A stock split lowers the price per share and thus makes the stock more attractive to potential investors. -Also termed share split; stock split-up.

> reverse stock split. (1957) A reduction in the number of a corporation’s shares by calling in all outstanding shares and reissuing fewer shares having greater value.

Stock subscription. See SUBSCRIPTION (2). Stock swap. See SWAP.

slock-transfer agent. See AGENT. stock-transfer tax. See TAX. stock warrant. See WARRANT (4).