ACC 201 Lecture Notes - Lecture 2: Authorised Capital, Common Stock, Initial Public Offering

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Maximum number of share that can be sold. Authorized shares that have been sold to the public. Issued shares that were sold but reacquired by the firm and are being held by the corporation. Preferred as to dividends and assets at liquidation (bankrupt) Has priority over common stocks at liquidation and when dividends are declared. Amount that must remain invested in the business. In some states, common stocks must have a par value. Par value has no relation to market value. In states that don"t require a par value. Legal capital is defined by state law rather than by a par value. Sale and issuance of common stock for public firm. The very first sale of a company"s stock to the public (when the company first goes public) New equity issue by already publicly traded company. Transactions between two investors, not with the issuing firm.

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