Fil 240

Front 1

agency cost

Back 1

Monitoring costs and audits are two examples

Front 2

agency problem

Back 2

exists when there is a conflict between
management and stockholders.

Front 3

agency relationship

Back 3

Stockholders and managers

Front 4

agent

Back 4

Management is the ___________ in the principal-agent problem.

Front 5

annual report

Back 5

A report issued annually by a corporation to its stockholders. Balance Sheet, Income Statement, Statement of Cash Flow, Statement of Retained Earnings

Front 6

average tax rate

Back 6

is the tax bill divided by taxable income.

Front 7

balance sheet

Back 7

lists the firm’s assets as well as claims
against those assets.

Front 8

Benchmarking

Back 8

comparing to the rest

Front 9

capital budgeting

Back 9

deals with which long-term assets to purchase

Front 10

capital gains

Back 10

difference between the sale price and the purchase price

Front 11

capital gains income

Back 11

example, bought stock $1 sold $5 capital gain = $4

Front 12

capital market

Back 12

are where securities with maturities greater
than one year are sold.

Front 13

capital structure deals

Back 13

with how to finance purchases

Front 14

common stock

Back 14

a security that represents ownership in a corporation

Front 15

corporation

Back 15

limited liability, unlimited life, transferability of ownership, better acces to capital, double taxation, time and cost of incorporation

Front 16

cross-sectional analysis

Back 16

Used to compare different firms at same point in time.

Front 17

dividends

Back 17

The proportion of a company's profit that it pays to its shareholders

Front 18

ethics

Back 18

can be thought of as a company’s attitude and conduct towards its employees, customers, community, and stockholders.

Front 19

Eurobond market

Back 19

Corporations and governments issue bonds denominated in dollars and sell them to investors located outside the U.S.

Front 20

exchange rate risk

Back 20

Risk of loss arising from fluctuations in exchange rates.

Front 21

finance

Back 21

is the study of how to manage assets and obtain funds in order to
maximize the wealth of shareholders

Front 22

financial markets

Back 22

where suppliers and demanders come together.

Front 23

income statement

Back 23

provides information on the revenues and expenses of the firm.

Front 24

inflation premium

Back 24

average rate of inflation over the life of the security

Front 25

limited partners

Back 25

limited liability, no double taxation, but relatively new, some legal issues not yet defined

Front 26

liquidity

Back 26

how easily converted into cash, with little or no loss

Front 27

liquidity ratios

Back 27

indicate the firm’s ability to meet short-term financial obligations.

Front 28

marginal tax rate

Back 28

is the extra tax that would be paid if
one more dollar was earned.

Front 29

market value

Back 29

how investors view the firm

Front 30

money market

Back 30

short term, liquidity, maturity

Front 31

net income

Back 31

= Revenue – Expenses.

Front 32

organized exchanges

Back 32

have physical locations where securities are
auctioned.

Front 33

partnership

Back 33

two or more owners, potential for more capital, income taxed as personal income, but unlimited liability, dissolved or reorganized if death or leave

Front 34

political risk

Back 34

Risk that a country’s government may take some action that would harm a foreign-owned company doing business in that country.

Front 35

primary market

Back 35

are where new securities are sold

Front 36

profitability ratios

Back 36

show the ability of a firm to use its sales, assets,
and equity to generate returns.

Front 37

profit maximization

Back 37

maximizing profit duh

Front 38

Sarbanes-Oxley Act

Back 38

an act passed by us congress 2002, protect investors from the possibility of fraudulent accounting activities by corporations through improving the accuracy and reliability of corporate disclosure.

Front 39

secondary markets

Back 39

Seasoned securities are traded in the

Front 40

sole proprietorship

Back 40

easy to establish, minimal organization costs, keep all profits, taxed once as personal income, but unlimited liability, limited capital, limited life

Front 41

statement of cash flows

Back 41

is designed to show how the firm’s operations have affected
its cash position operating, investing, & financing

Front 42

statement of retained earnings

Back 42

reports changes in the equity accounts
between balance sheet dates.

Front 43

Stockholders

Back 43

people who purchase corporate share of stock become part owners of the corporation

Front 44

stock price maximization

Back 44

maximizing stock price

Front 45

treasurer

Back 45

manages the firm’s cash and credit; financial planning;
net working capital; and its capital expenditures

Front 46

working capital management

Back 46

refers to managing the firm’s current
assets and current liabilities.

Front 47

yield curve

Back 47

A graph showing the relationship between bond yields and maturities; term structure of interest rates.