You own 10 shares of IBM stock. Do your voting rights have much meaning? If you
ID: 2787168 • Letter: Y
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You own 10 shares of IBM stock. Do your voting rights have much meaning? If you cannot attend a stockholders meeting, how could you süll vote? Why do investors buy common stock? Joe Bob has heard that preferred stock is a better investment than common stock or bonds. Describe for Joe Bob what preferred stock is and the various features such as callable and cumulative. Describe earnings per share, price earnings ratio, price/earnings to growth ratio, total return, book value. Why are EPS and P/E so important to investors? You are told by your broker about a new stock that is going public. Would you rather invest in an IPO or in an established company? Why? Bob tells his broker to buy 100 shares of Coca-Cola. Terri tells her broker to buy Berkshire Hathaway if it falls to $80,000. Tammy tells her broker to sell Google if it falls to $50. Describe these various types of orders. What is a discretionary order? What could be some advantages of using an order other than a market order for buying or selling stock? Contrast between full service and discount brokers. Which broker would you use? Why? Distinguish between dollar cost averaging, direct investment plans, DRIPS, buying on margin, options and selling short. Which of these techniques (could be more than one) would only a seasoned, risk-taking investor use? Why? What is a day trader?Explanation / Answer
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1. Common stock holders have voting rights with respect to the number of shares held by the shareholder. Each share will have voting right and it is not on each shareholder basis, so for a person holdinge high number of shares can vote more than a person holding less shares. Shareholders can exercise voting rights at Annual general body meeting, or through e-mail or proxy voting incase they cant attend the meeting. Common stock is purchased at low prices and capital appreciation is expected, along with voting rights on decisions taken by the company.
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