Finance Prelim 1
Terms
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- cumulative voting
- a procedure in which a shareholder may cast all votes for one member of the board of directors
- proxy
- authority to allow another to vote for you
- dealer
- agent who buys and sells securities from own inventrory
- broker
- brings buyers and sellers together
- specialist
- a NYSE member acting as a dealer in a small number of securities on the exchange floor, the market maker
- member
- the owner of a seat on the NYSE
- over the counter market
- securities market in which trading is done almost exclusively through dealers who buy and sell their own inventories
- preferred stock
- stock with dividend priority over common stock
- dividend yield
- a stock's expected cash dividend divided by its current price
- capital gains yeild
- dividend growth rate - g
- protective covenant
- a part of the indenture that protects the lender by limiting certain actions during the loan period
- call protected bond
- a bond that during a certain period, cannot be redeemed by the issues
- deferred call provision
- a call provision prohibiting the company from redeeming the bond before a date
- call premium
- the amount by which the call price exceeds the par value of the bond
- call provision
- an agreement giving the corporation the option to repurchase the bond at a specified price before maturity
- sinking fund
- an account managed for early bond redemption
- debenture
- an unsecured debt usually with a maturity of 10 years or more
- note
- an unsecured debt with maturity under 10 years
- indenture
- the written agreement between the corporation and the lender
- registered form
- the record of the bond, payment is made to the owner of record
- bearer form
- the form of bond issue in which the bond issued without record of the owner's name. payment is made to whoever holds the bond
- current yield
- bond's annual coupon divided by its price
- face value
- the principal amount of a bond that is repaid at the end of the term
- t - bills, notes, bonds
- bills < 2 notes 2-10 bonds > 10
- interest rate risk
- price risk and reinvestment rate risk
- debt
- bad in excess, not votes, tax deductible interest
- equity
- ownership, voting rights, dividends are taxed
- capital budgeting
- planning and managing of a firm's long term investments
- capital structure
- mix of debt and equity maintained by a firm
- working capital
- firm's short term assets and liabilities, inventory, accounts payable/receivable
- sole proprietorship
- single owner, unlimited liability, keeps all profits
- partnership
- one or more individuals, unlimited liability, hard to transfer ownership
- corporation
- easy to transfer ownership, distinct legal entity, unlimited life
- Limited liability corporation
- hybrid of partnership and corporation
- controller
- tax manager, accounting
- treasurer
- cash manager, credit manager, financial planning
- annuity
- level stream of cash flow for a period of time
- stakeholder
- someone other than a creditor or stockholder who has a claim on the cash flows to the firm