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26 Cards in this Set
- Front
- Back
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an unincorporated business owned by one individual
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sole proprietorship
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easily & inexpensively formed, avoids corporae income taxes
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sole proprietorship (advantages)
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difficult to get large sums of capital, unlimited personal liability, limited life
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sole proprietorship (disadvantages)
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an unincorporated business owned by 2 or more people
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partnership
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low cost and ease of formation
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partnership
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unlimited liability, limited life, difficulty transferring ownership, difficulty raising large sums of capital
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partnership
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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
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corporation
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includes: name of proposed corp, types of activities, amt of capital stock, number of directors, name and addresses of directors
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charter
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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
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bylaws
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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
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stockholder wealth maximization
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those profits and rates of return that are close to the average for all firms and are suficcient to attract capital
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normal profits and rates of return
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a potential conflict of interestes between the agent (manager) and (1) the outside stockholders or (2) the creditors (debtholders)
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agency problems
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stock that is awarded to executives on the basis of the company's performance
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performance shares
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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
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executive stock option
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the acquisition of a company over the opposition of its management
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hostile takeover (managers v stockholders)
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markets for such products as wheat, autos, real estate, machinery
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physical asset markets
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markets that deal with stocks, bonds, notes, mortgages, etc
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financial asset markets
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the markets in which assets are bought or sold for on the spot delivery
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spot markets
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markets in which participants agree today to buy or sell an asset at some future date
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future markets
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financial markets in which funds are borrowed or loaned for short periods of time (less than 1 year)
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money markets
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financial markets for stocks and for intermediate or long-term debt (one year or longer)
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capital markets
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markets in which corporations raise capital by issuing new securities
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primary markets
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markets in which securities and other financial assets are traded among investors after they have been issued by corporations
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secondary markets
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the market in which a firm goes public by offering shares to the public
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initial public offering (IPO)
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markets in which transactions are worked out directly between two people
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private markets
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markets in which standarized contracts are traded on organized exchanges
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public markets
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