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Flashcards in Vocab Deck (23)
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1

shares oustanding

the number of shares actually issued

2

authorized shares

how many shares, in theory, a corporation is allowed to issue (does not result in an accounting transaction)

3

cumulative

dividend is owed each year, even if they are not paid (determines if dividends are paid in arrears)

4

dividends in arrears

dividends in previous years that are required to be paid out; becomes an obligation on date of DECLARATION

5

convertible

shares that can be converted from c/s to p/s

6

non-callable

cannot be forced to be bought back by company - shareholder can decide

7

no par value

price of share is to be determined by the market

8

surplus

when book value is greater than stock repurchase price, there is a surplus

9

deficit

when book value is less than stock repurchase price, there is a deficit

10

provisions

there is a present obligation with uncertain timing or amount and an outflow is likely (>50% chance of occurring under IFRS)

11

contingent

dependent on future event; not probable/measurable / disclosed in notes of fin statements

12

notes payable

interest-bearing liability with principal due at maturity

13

mortgages payable

interest-bearing liability with instalment payments

14

table 1: present value of $1

used to calculate the face value or principal of a bond

15

table 2: present value of an annuity of $1

used to calculate the present value of all of the future bond interest payments

16

interest rate

aka implicit borrowing rate, discount rate, cost of capital. ALWAYS the market value rate when present valuing a bond (aka opportunity cost)

17

face value

aka principal; what the bond issuer must pay the bond holder at the maturity date / ALWAYS $1000 PER BOND IN 2257

18

coupon rate

stated rate of interest ; always given at an annual rate , always paid semi-annually

19

market rate

interest rate of comparable companies (the rate all investors demand)

20

maturity date

when the principal must be paid back to the bondholder in addition to any remaining interest

21

bond premium

when demand is high for a bond, purchasing the bond should cost more than $1000

occurs when coupon rate > market interest rate

22

bond discount

when demand is low for a bond, purchasing the bond should cost less than $1000

occurs when coupon rate < market interest rate

23

effective interest rate method (3 bubble method)

allows us to spread the cost of issuing a bond at a discount, or the benefit of issuing a bond at a premium over the life of the bond