Ch 1 - Corporate Finance and the Financial Manager Flashcards Preview

MOS 2310: Finance > Ch 1 - Corporate Finance and the Financial Manager > Flashcards

Flashcards in Ch 1 - Corporate Finance and the Financial Manager Deck (30)
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1

sole proprietorship

business owned and run by one person

2

partnership

business owned and run by more than one owner

3

limited partnership

a partnership with two kinds of owners, general partners and limited partners

4

limited liability

when an investor's liability is limited to her investment

5

limited liability company (LLC)

a limited partnership without a general partner

6

corporation

legally defined, artificial being, separate from its owners

7

stock

ownership or equity of a corporation divided into shares

8

equity

collection of all the outstanding shares of a corporation

9

shareholder/stockholder/equity holder

owner of a share of stock or equity in a corporation

10

dividend payments

payments made at the discretion of the corporation to its equity holders

11

S corporations

corporations that elect subchapter S tax treat- ment and are exempted by the U.S.Internal Revenue Service’s tax code from double taxation

12

C corporations

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.

13

board of directors

group of people elected by shareholders who have the ultimate decision- making authority in the corporation

14

chief executive officer

The person charged with running the corporation by instituting the rules and policies set by the board of directors.

15

agency problem

When managers,despite being hired as the agents of shareholders,put their own self-interest ahead of the interests of those shareholders.

16

hostile takeover

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.

17

stock markets/stock exchanges/bourses

Organized markets on which the shares of many corporations are traded.

18

primary market

when corporation issues new shares or stock and sells them to investors

19

secondary market

Markets,such as NYSE or NASDAQ,where shares of a corporation are traded between investors without the involvement of the corporation

20

market makers

individuals on a stock exchange who match buyers with sellers

21

specialists

Individuals on the trading floor of the NYSE who match buyers with sellers; also called market makers.

22

bid price

The price at which a market maker or specialist is willing to buy a security.

23

ask price

The price at which a market maker or specialist is willing to sell a security.

24

auction market

A market where share prices are set through direct interaction of buyers and sellers.

25

bid-ask spread

The amount by which the ask price exceeds the bid price.

26

transaction cost

In most markets,an expense such as a broker commission and the bid-ask spread investors must pay in order to trade securities

27

over the counter market (OTC)

A market without a physical location,in which dealers are connected by computers and telephones.

28

dealer market

a market where dealers buy and sell for their own accounts

29

listing standards

Outlines of the requirements a company must meet to be traded on the exchange

30

financial institutions

Entities that provide financial services,such as taking deposits,managing investments,brokering financial transactions,or making loans