Details Title: ch. 2 Description: sucks Total Flash Cards: 55 Created: 09/03/2006 21:24:05		New Users: To study from this flashcard set, or to create your own your own study flash cards, REGISTER HERE. Existing Users: CLICK HERE. Additional Finance Flashcards
Cards in this set: Term debt Definition loan to a firm, government, or individual Term discounted securities Definition securities selling for less than par value Term Tresure bills Definition discounted debt insgtruments issued by the U.S. government Term repurchase agreement Definition an arrangement where one firm sells some of its financial assets to another firm with a promise to repurshcase the securites at a later date. Term federal funds Definition overnight loans from one bank to another Term bankers acceptance Definition an instrument issued by a bank that obligates the bank to pay a specifed amount at some future date. Term commercial paper Definition a discounted instrument that is a type of promissory note, or leagal, IOU, issued by large, finanacially sound firms. Term certificate of deposit Definition an interest-earning time deposit at a bank or other financial intermediary. Term negotiable cd Definition certificate of deposit that can be traded to other investors prior to maturity; redelption is made by the investor who owns the cd at maturity. Term eurodollar deposit Definition a deposit in af oreign bnak that is denominated in u.s. dollars. Term noney market mutual funds Definition pools of funds managed by investment companies that are primarily invested in short-term financial assets. Term term loan Definition a loan, generally obtained from a bank or insurance company, on which the borrower agrees to make as eries of payments consisting of interest and principal Term bond Definition a long-term debt instrument Term coupon rate Definition interst paid on a bond or other deb instrument stated as a percentage of its face, or maturity, value. Term government bond Definition debt issued by federal state, or local governments Term municipal bond Definition bond issued by state or local governments. Term revenue bond Definition a municipal bond that gernerates revenue, which in turn can be used to make interest payments and repay the principal Term general obligation bond Definition a municipal bond backed by the local government's ability to impose taxes. Term corporate bonds Definition long-term debt instruments issued by corporations Term debenture Definition long-term bond that is not secured by a mortgage on specific property. Term subordinated debenture Definition a bond that has a claim on assets only after the senior debt has been paid off in the event of liquidation. Term income bond Definition a bond that pays interest to the holder only if the interest is earned by the firm Term putable bond Definition a bond that can be redeemed at the bondholder's option Term indexed (purchasing power) bond Definition a obond that has interst payments based on an inflation index to protect the holder from inflation. Term zero coupon bond Definition a bond that pays no annual interst but is sold at a dicoutn below par thus providing compensation to investors in the form of capital appreciation. Term junk bond Definition a high-risk, high-yield bond used to finance mergers, leveraged buyouts, and troubled companies. Term indenture Definition a formal agreement between th issuer of a bond and the bondholders Term trustee Definition an official who ensures that the bondholders' interests are protected and that the ters of the indenture are carreid out. Term restrictive covenant Definition a provision in a debt contract that constrains the actinos of the borrower. Term call provision Definition a provision in a bond contract that gives the issuer the right to redeem the bonds under specified terms prior to the normal maturity date. Term sinking fund Definition a requried anual payment designed to amortize a bond or preferred stock issue. Term conversion feature Definition permits bondholders to exchange their inestmnets for a fixed number of shares of common stock. Term investment-grade bond Definition a bond rated A or triple-B; many banks and oher institutional investor s are permitted by law to hold only bonds rated investment-grade or better. Term cumulative dividends Definition a protective feature on preferred stock that requires preferred dividends previously not paid to be disbursed before any common stock dividends can be paid. Term call premium Definition the amount in ecess of par value that a company must pay when it calls a security. Term income stocks Definition stocks of firms that traditionally pay large, relatively constant dividends each year Term growth stocks Definition stocks that generally pay little or no dividends as to retain earnings to help fund growth opportunities. Term proxy Definition a document giving one person the authority to act for another, typically the power to vote shares of common stock. Term proxy fight Definition an attempt by a person or group of people to gain control of a firm by getting its stockholders to grant that person or group the authority to vote their shares so as to change the management team. Term takeover Definition an aaction whereby a person or group succeeds in outsting a firm's management and taking control of the company. Term preemptive right Definition a provision in the corporate charter or bylaws that gives common stockholders the right to purchase on a pro rata basis new issues of comon stock. Term classified stock Definition common stock that is given a special designation, such as class a, class b and so forth to meet special needs of the ocmpany. Term founders' shares Definition stock owned by the firm's founders that has sole voting rights but generally pays out only restricted dividends fo ra specified number of years Term derivatives Definition financial assets whos values depend on the values of other assets, such as stocks or bonds Term option Definition a contract that gives the option holder the right to buy or sell an asset at some predetermined price within a specified period of time Term call option Definition an option to buy shares of stock at a certain price within a secified time Term put option Definition an option to sell Term striking price Definition the price that must be paid for a share of common stock when an option is exercised Term convertible security Definition a security usually a bond or preferred stock that is exchangeable at the option of the holder for the common stock of the issuing firm. Term futures contract Definition an arragnement for delivery of an intem at some date in the future wehre deliery detailes are determined when the contract is created. Term swap Definition an agreement to exchange or swap cash flows or assets at some time in the future. Term American depository receipts (ADRs) Definition certificates representing ownership in stocks of foreign companies that are held in trust by a bank located in the country the stock is traded. Term foreign debt Definition a debt instrument sold by a foreign borrower but the denominated in the currency of the country in which it is sold. Term eurodebt Definition debt sold in a country other than the one in whose currency the debt is denominated Term LIBOR Definition the London InterBank Offer Rate; the interest reate offered by the best london banks on deposits of other larege, very creditworthy banks.