FIN Exam 1
Terms
undefined, object
copy deck
- an unincorporated business owned by one individual
- sole proprietorship
- easily & inexpensively formed, avoids corporae income taxes
- sole proprietorship (advantages)
- difficult to get large sums of capital, unlimited personal liability, limited life
- sole proprietorship (disadvantages)
- an unincorporated business owned by 2 or more people
- partnership
- low cost and ease of formation
- partnership
- unlimited liability, limited life, difficulty transferring ownership, difficulty raising large sums of capital
- partnership
- a legal entity created by a state, seperate and distinct from its owners and managers, having unlimited life, easy transferibility of ownership and limited liability
- corporation
- includes: name of proposed corp, types of activities, amt of capital stock, number of directors, name and addresses of directors
- charter
- the primary goal for management decisions; considers the risk and timing associated with expected earnings per share in order to maximize the price of the firm's common stock
- stockholder wealth maximization
- those profits and rates of return that are close to the average for all firms and are suficcient to attract capital
- normal profits and rates of return
- a potential conflict of interestes between the agent (manager) and (1) the outside stockholders or (2) the creditors (debtholders)
- agency problems
- stock that is awarded to executives on the basis of the company's performance
- performance shares
- the acquisition of a company over the opposition of its management
- hostile takeover (managers v stockholders)
- markets for such products as wheat, autos, real estate, machinery
- physical asset markets
- markets that deal with stocks, bonds, notes, mortgages, etc
- financial asset markets
- the markets in which assets are bought or sold for on the spot delivery
- spot markets
- financial markets in which funds are borrowed or loaned for short periods of time (less than 1 year)
- money markets
- financial markets for stocks and for intermediate or long-term debt (one year or longer)
- capital markets
- markets in which corporations raise capital by issuing new securities
- primary markets
- markets in which securities and other financial assets are traded among investors after they have been issued by corporations
- secondary markets
- the market in which a firm goes public by offering shares to the public
- initial public offering (IPO)
- markets in which transactions are worked out directly between two people
- private markets
- markets in which standarized contracts are traded on organized exchanges
- public markets