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29 Cards in this Set
- Front
- Back
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Proprietorship |
A business owned by one individual. |
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Partnership |
When two or more persons associate to conduct business. |
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Limited partnership |
A partnership in which limited partners' liabilities, investment returns, and control are limited; general partners have unlimited liability and control. |
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Limited liability partnership (LLP) |
Combines the limited liability advantage of a corporation with the tax advantages of partnership. |
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Corporation |
A legal entity created by a state. The corporation is separate and distinct from its owners and mangers. |
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Charter |
Legal document that is filed with the state to incorporate a company. |
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Professional corporation (PC)/Professional Association (PA) |
Has most of the benefits of incorporation but the participants are not relieved of professional (malpractice) liability; known in some states as a professional assoc (PA) |
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S corporations |
A small corporation that, under Subchapter S of the Internal Revenue Code, elects to be taxed as a proprietorship or a partnership yet retains limited liability and other benefits of the corporate form of organization.
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Initial public offering (IPO) |
Going public is the act of selling stock to the public at large by a closely held corporation or its principal stockholders, and this market is often termed the initial public offering market. |
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Agency problem |
an expense, either direct or indirect, that is borne by a principal as a result of having delegated authority to an agent. |
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Corporate governance |
The set of rules that controls a company's behavior toward its directors, managers, employees, shareholders, creditors, customers, competitors, and community. |
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Market price |
Stock price, what investors perceive the value to be. |
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Intrinsic price |
Value or price that incorporates are relevant information regarding expected future cash flows and risks.
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Fundamental price |
Value or price that incorporates all relevant information regarding expected future cash flows and risk. |
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Free cash flows (FCF) |
The cash flow actually available for distribution to all investors after the company has made all investments in fixed assets and working capital necessary to sustain ongoing operations.
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Weighted average cost of capital (WACC) |
The weighted average of the after-tax component costs of capital - debt, preferred stock, and common equity. Each weighting factor is the proportion of that type of capital in the optimal, or target, capital structure.
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Investment banking house |
A firm that assists in the design of an issuing firm's corporate securities and in the sale of the new securities to investors in the primary market.
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Financial intermediary |
intermediary that buys securities with funds that it obtains by issuing its own securities. An example is a common stock mutual fund issuing shares in the mutual fund.
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Derivatives |
Claims whose value depends on what happens to the value of some other asset. Futures and options are two important types of derivatives, and their values depend on what happens to the prices of other assets. Therefore, the value of a derivative security is derived from the value of an underlying real asset or other security. |
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Exchange rate risk |
Refers to the fluctuation in exchange rates between currencies over time. |
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Investment banking houses |
A firm that assists in the design of an issuing firm's corporate securities and in the sale of the new securities to investors in the primary market.
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Mutual funds |
A corporation that sells shares in the fund and uses the proceeds to buy stocks, long-term dividends, interest, and capital gains are distributed to the fund's shareholders after the deduction of operating securities, such as growth stocks, international stocks, or municipal bonds. |
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Money market funds |
A mutual fund that invests in short-term debt instruments and offers investors check-writing privileges; thus, it amounts to an interest-bearing checking account.
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IPO market |
Going public is the act of selling stock to the public at large by a closely held corporation or its principal stockholders. |
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Physical location exchange |
Exchanges, such as the NYSE, that facilitate trading of securities at a particular location. |
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Dealer market |
In a dealer market, a dealer holds an inventory of the security and makes a market by offering to buy or sell. Others who wish to buy or sell contact the dealer of their choice to arrange a transaction. |
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Going public |
The act of selling stock to the public at large by a closely held corporation or its principal stockholders. |
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National Association of Securities Dealers (NASD) |
An industry group primarily concerned with the operation of the over-the-counter market |
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Primary market |
Markets in which newly issued securities are sold for the first time. |
