Common Stock: Rapid Fire

What this video covers

• Why common stock is called a residual claim, where it sits in the liquidation waterfall, and how limited liability caps shareholder losses at the total investment
• The nested share hierarchy: authorized, then issued, then outstanding, and why treasury stock is issued but NOT outstanding with zero dividends, zero votes, and zero earnings per share (EPS) inclusion
• How to calculate outstanding shares from issued and treasury, and what remains available for future issuance
• Statutory voting versus cumulative voting: which system benefits majority holders and which gives minority shareholders a strategic path to board representation
• Pre-emptive rights: what they protect against, and the critical trap that they are never automatic unless the corporate charter explicitly grants them
• The transfer agent versus registrar distinction, and why law requires them to be separate entities to prevent over-issuance fraud
• How spinoffs SPLIT cost basis by relative fair market value (FMV) while mergers SUBSTITUTE it, and why both actions tack on the original holding period
• The reorganization boot rule: why loss is NEVER recognized, and gain is recognized only up to boot received
• The two-part penny stock definition (unlisted AND under $5), the price ceiling trap with listed stocks, and which disclosures remain mandatory even for established customers