Term
| .ch1- the goal of large firms should be to maximize shareholder wealth, which means maximizing the value of the .... |
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Definition
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Term
| ch1- finance within an organization (fig 1.1) |
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Definition
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Term
| ch1- two companies that got in trouble for front running? |
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Definition
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Term
| ch1- what does the sarbanes-oxley act require? |
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Definition
| that the CEO and CFO certify that their firms' financial statements are accurate |
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Term
| ch1- two principles of financial management (corporate finance)? [applies to both profit and non-profit] |
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Definition
1. how much of and what kind of assets to acquire
2. how to raise the capital needed to acquire the assets |
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Term
| ch1- capital markets refer to the markets where... |
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Definition
| interest rates along with stock and bond prices are determined |
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Term
| ch1- investments relate to decision concerning stocks and bonds through.. (3 ways) |
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Definition
| 1. security analysis 2. portfolio theory (diversified portfolios limit risks) 3. Market analysis |
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Term
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Definition
| an unincorporated business owned by one individual |
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Term
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Definition
| an unincorporated business owned by two or more persons |
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Term
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Definition
| a legal entity created by a state, separate and distinct from its owners and managers, having unlimited life, easy transferability of ownership, and limited liability |
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Term
| ch1- congress created S corporations to.. |
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Definition
| aid small businesses, exempting them from corporate taxes or double- taxation |
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Term
| ch1- what is a limited liability company (LLC)? |
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Definition
| organization that is a hybrid between a partnership and a corporation |
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Term
| ch1- what is a limited liability partnership (LLP)? |
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Definition
| similar to LLC, but used for accounting, architecture, and law. Limited liability like corporations, but taxed like partnerships |
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Term
| ch1- the value of any asset is the .. |
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Definition
| PV of the stream of cash flows that the assets provides to its owners over time. |
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Term
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Definition
| estimate of a stocks "true" value based on accurate risk and return data. can only be estimated, not precisely measured |
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Term
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Definition
| stock value based on perceived, but possibly wrong info by the marginal investor |
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Term
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Definition
| an investor whos views determine the actual stock price |
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Term
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Definition
| situation when actual market price equals intrinsic value |
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Term
| ch1- 3 important business trends |
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Definition
| globalization, improving information technology, corporate governance |
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Term
| ch1- business ethics can be thought of as... |
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Definition
| a company's attitude and conduct towards its employees, customers, community, and stockholders |
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Term
| ch1- three companies that collapsed because of unethical practices |
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Definition
| enron, worldcom, and arthur andersen |
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Term
| ch1- true or false: in most of the scandals that have gone to trial, the lower-level people who physically entered the bad data received longer jail sentences than the bosses who gave the orders |
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Definition
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Term
| ch1- example of a manager vs stockholder conflict? |
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Definition
| Tyco CEO, dennis kozlowski, spent more than $1 million on his wife's bday party |
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Term
| ch1- three motivational tools to ensure managers are focused on stockholder wealth, rather than their own |
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Definition
| 1. reasonable compensation packages 2. firing of managers who dont perform well 3. threat of hostile takeovers |
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Term
| ch1- true of false: stockholders can intervene directly with managers |
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Definition
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Term
| ch1- today the majority of stocks are owned by institutional investors such as: (4 examples) |
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Definition
| insurance companies, pension funds, hedge funds, and mutual funds |
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Term
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Definition
| an individual who targets a corporation for takeover because it is undervalued |
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Term
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Definition
| when a corporate raider acquires a company over the opposition of its management |
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Term
| ch1- true/false: managers should be trying to maximize price for the long run instead of for a specific day |
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Definition
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Term
| ch2- direct transfer occur when |
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Definition
| a business sells its stocks or bonds directly to savers; relatively llittle capital in earned |
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Term
| ch2- indirect transfers (primary market transaction) through investment bankers uses an underwriter to... |
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Definition
| serve as a middleman. company sells its stock to investment bank, which then sells them to savers. risky |
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Term
| ch2- name three ways capital is transferred between savers and borrowers |
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Definition
| 1. direct transfers 2. indirect transfers through investment bankers/ primary market transaction 3. indirect transfers through a financial intermediary |
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Term
| ch2- examples of a financial intermediary (3) |
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Definition
| bank, insurance company, or mutual fund |
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Term
| ch2- transfers through a financial intermediary is when... |
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Definition
| the intermediary obtains funds from savers in exchange for its securities |
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Term
| ch2- a security is something that shows... |
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Definition
| ownership of a portion of a publicly-traded company or that youre owed a portion of a debt issue. Securities are tradable. At their most basic, securities refer to stocks and bonds, but the term sometimes also refers to derivatives such as futures and options. |
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Term
| ch2- the financial intermediary uses the money obtained from savers to... |
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Definition
| buy and hold businesses' securities, while the saver holds the intermediary's securities |
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Term
| ch2- true/false: intermediaries create a new form of capital |
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Definition
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Term
| ch2- the existence of intermediaries (increase, decrease) the efficiency of money and capital markets |
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Definition
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Term
| ch2- why are efficient capital markets necessary for economic growth? |
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Definition
| itis difficult for an economy to reach its full potential if it doesnt have access to a well- functioning financial system |
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Term
| ch2- the eight kinds of maarkets |
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Definition
| spot, futures, money, capital, primary, secondary, private, public |
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Term
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Definition
| markets which assets are bought or sold on the spot |
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Term
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Definition
| markets which participants agree to buy or sell an asset at a future date |
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Term
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Definition
| financial mkts which funds are borrowed or loaned for short periods (less than one yr) |
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Term
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Definition
| financial mkts for stocks and for long term or intermediate debt (> 1 yr) |
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Term
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Definition
| markets in which corporations raise capital by issuing new securities |
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Term
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Definition
| mkts in which securities and other fin asserts are traded among investors after being issued by corporations |
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Term
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Definition
| mkts in which transactions are worked out directly between two parties |
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Term
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Definition
| mkts in which standardized contracts are traded on organized exchanges |
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Term
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Definition
| any fin asset whose value is derived from the value of some "underlying" asset |
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Term
| ch2- ten financial institutions |
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Definition
| investment banks, commercial banks, financial services corporations, credit unions, pension funds, life insurance companies, mutual funds, exchange traded funds, hedge funds, private equity companies |
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Term
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Definition
| an organization that underwrites and distributes new investment securities and helps businesses obtain financing |
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Term
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Definition
| traditional server of finance that gives a variety of savers and borrowers |
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Term
| ch2- financial services ccorporations |
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Definition
| firm that offers a wide range of financial services, including investment banking, brokerage operations, insurance and commercial banking |
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Term
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Definition
| organizations that pool investor funds to purchase financial instruments and reduces risks through diversification |
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