Flashcards in Ch 1 - Corporate Finance and the Financial Manager Deck (30)
business owned and run by one person
business owned and run by more than one owner
a partnership with two kinds of owners, general partners and limited partners
when an investor's liability is limited to her investment
limited liability company (LLC)
a limited partnership without a general partner
legally defined, artificial being, separate from its owners
ownership or equity of a corporation divided into shares
collection of all the outstanding shares of a corporation
owner of a share of stock or equity in a corporation
payments made at the discretion of the corporation to its equity holders
corporations that elect subchapter S tax treat- ment and are exempted by the U.S.Internal Revenue Service’s tax code from double taxation
Corporations that have no restrictions on who owns their shares or the number of shareholders; they can- not qualify for subchapter S treatment and are sub- ject to direct taxation.
board of directors
group of people elected by shareholders who have the ultimate decision- making authority in the corporation
chief executive officer
The person charged with running the corporation by instituting the rules and policies set by the board of directors.
When managers,despite being hired as the agents of shareholders,put their own self-interest ahead of the interests of those shareholders.
A situation in which an individual or organization,some- times referred to as a corporate raider, purchases a large fraction of a target corporation’s stock and in doing so gets enough votes to replace the target’s board of directors and its CEO.
stock markets/stock exchanges/bourses
Organized markets on which the shares of many corporations are traded.
when corporation issues new shares or stock and sells them to investors
Markets,such as NYSE or NASDAQ,where shares of a corporation are traded between investors without the involvement of the corporation
individuals on a stock exchange who match buyers with sellers
Individuals on the trading floor of the NYSE who match buyers with sellers; also called market makers.
The price at which a market maker or specialist is willing to buy a security.
The price at which a market maker or specialist is willing to sell a security.
A market where share prices are set through direct interaction of buyers and sellers.
The amount by which the ask price exceeds the bid price.
In most markets,an expense such as a broker commission and the bid-ask spread investors must pay in order to trade securities
over the counter market (OTC)
A market without a physical location,in which dealers are connected by computers and telephones.
a market where dealers buy and sell for their own accounts
Outlines of the requirements a company must meet to be traded on the exchange