1. 35.1 b a c kn e x t h o m e Chapter 35 Objectives  Define capital stock.  List the various types of stock and stock rights.  Explain what dividends are and how they may be paid.  Name the various laws regulating the sale of securities, exchanges, and brokers. © 2002 West Educational PublishingTo accompany Law for Business, 14e, by Ashcroft and Ashcroft

2. 35.2 b a c kn e x t h o m e Some definitions to know: Capital stock  Declared money value of a corporation’s outstanding stock. Shares  Individual units of capital stock. Shareholder or stockholder  Person who owns shares of stock. Stock certificate  Written evidence of stock ownership. Corporations

3. 35.3 b a c kn e x t h o m e Classes of Stock Common stock  Simplest and most ordinary stock issued.  Owners may vote in stockholders’ meeting.  Have no voice in running of the corporation beyond annual vote. Preferred stock  Receives preference to certain rights.  However, owners give up certain rights: Right to vote in stockholders’ meeting Right to participate in profits beyond percentage fixed in certificate

4. 35.4 b a c kn e x t h o m e Preferred as to assets  This is an advantage only in liquidation. Preferred as to dividends  Preferred stockholders receive dividends before any common stockholders. Cumulative - dividends must be paid before common stockholders receive any dividends. Noncumulative - dividends have to be paid only for current year before common stock dividends are paid. Preferred Stock

5. 35.5 b a c kn e x t h o m e  Describe each kind of stock:  Par-value stock  No-par-value stock  Treasury stock  Watered stock  How may stock be transferred?  Define a stock option. Kinds of Stock Let’s Discuss Let’s Discuss Let’s Discuss Let’s Discuss Let’s Discuss Let’s Discuss Let’s Discuss Let’s Discuss Common Stock

6. 35.6 b a c kn e x t h o m e Laws Regulating Sales of Stock 2. Securities Act of 1933 2. Securities Act of 1933 1. Blue-Sky Laws 4. Securities Investor Protection Act of 1970 4. Securities Investor Protection Act of 1970 3. Securities Exchange Act of 1934 3. Securities Exchange Act of 1934 Explain the impact each piece of legislation had on the sale of stocks: Quick Quiz Quick Quiz Quick Quiz Quick Quiz Quick Quiz Quick Quiz Quick Quiz Quick Quiz