Equity vocabulary part two, chapter one series 7 outline

• authorized stock, the maximum number of shares of stock that has been authorized to be issued by the corporate charter a)has to be registered with the SEC before being publicly sold to the future owners of the company b)existing stockholders must approve any amount of stock above the authorized amount
• incorporators, the original owners of the corporation who contribute the initial capital($) to start the business. They give themselves issues of the common stock in exchange for the money they invest, elect themselves to the board of directors and appoint themselves as officers
• corporate charter mandates a limit to the number of shares that can be issued
• unissued stock, additional shares that can be issued with the approval of the common stock holders
• issued stock-authorized stock that has been issued to shareholders in either private placements or public offerings-either outstanding stock or treasury stock
•  outstanding stock-shares of the company that are owned by investors. Have been issued, sold by company to employees or members of the public. Outstanding=issue stock-treasury stock, voting rights are only for owners of outstanding stock
•  treasury stock-shares of stock that have been issued by the corporation but repurchased by the company to reduce the amount of outstanding stock, no longer outstanding 1. no dividends, 2. no voting rights, 3. no electing board of directors
• Why do companies buy back stock? a)to distribute for stock option plans, b)for use in acquisitions and takeovers, c)to increase the earnings per share which should increase the market value of the outstanding stock, d)the market value of the stock will generally rise because there are less shares outstanding and buyers will then have a greater demand for shares of that company