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26 Cards in this Set

  • Front
  • Back
an unincorporated business owned by one individual
sole proprietorship
easily & inexpensively formed, avoids corporae income taxes
sole proprietorship (advantages)
difficult to get large sums of capital, unlimited personal liability, limited life
sole proprietorship (disadvantages)
an unincorporated business owned by 2 or more people
low cost and ease of formation
unlimited liability, limited life, difficulty transferring ownership, difficulty raising large sums of capital
a legal entity created by a state, seperate and distinct from its owners and managers, having unlimited life, easy transferibility of ownership and limited liability
includes: name of proposed corp, types of activities, amt of capital stock, number of directors, name and addresses of directors
includes: how directors are to be elected, whether existing stockholders will have the first right to buy any new shares and procedures for changing these
the primary goal for management decisions; considers the risk and timing associated with expected earnings per share in order to maximize the price of the firm's common stock
stockholder wealth maximization
those profits and rates of return that are close to the average for all firms and are suficcient to attract capital
normal profits and rates of return
a potential conflict of interestes between the agent (manager) and (1) the outside stockholders or (2) the creditors (debtholders)
agency problems
stock that is awarded to executives on the basis of the company's performance
performance shares
an option to buy stock at a stated price within a specified period that is granted to an executive as part of his or her compensation package
executive stock option
the acquisition of a company over the opposition of its management
hostile takeover (managers v stockholders)
markets for such products as wheat, autos, real estate, machinery
physical asset markets
markets that deal with stocks, bonds, notes, mortgages, etc
financial asset markets
the markets in which assets are bought or sold for on the spot delivery
spot markets
markets in which participants agree today to buy or sell an asset at some future date
future markets
financial markets in which funds are borrowed or loaned for short periods of time (less than 1 year)
money markets
financial markets for stocks and for intermediate or long-term debt (one year or longer)
capital markets
markets in which corporations raise capital by issuing new securities
primary markets
markets in which securities and other financial assets are traded among investors after they have been issued by corporations
secondary markets
the market in which a firm goes public by offering shares to the public
initial public offering (IPO)
markets in which transactions are worked out directly between two people
private markets
markets in which standarized contracts are traded on organized exchanges
public markets