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20 Cards in this Set
- Front
- Back
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money
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financial capital
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long term plant and equipment
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real capital
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study of the relative importance of debt and equity
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capital structure theory
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increase of prices
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inflation
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slowing down of price increases
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disinflation
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single person ownership that offers the advantages of simplicity of decision making and low organizational and operating costs
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sole proprietorship
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Advantages of sole proprietorship
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simple decision making
low operating costs your own boss |
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Disadvantages of sole proprietorship
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unlimited liability
goes away at owners death |
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similar to a sole proprietorship except that there are two or more owners
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partnership
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Advantages to a partnership
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raise more capital
share ownership responsibility |
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specifies the ownership interest, the methods for distributing profits, and the means for withdrawing in a partnership
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articles of partnership
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one or more partners are designated general partners and have unlimited liability for the debts of the firm; other partners are designated limited partners and are liable only for thier initial contribution
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limited liability partnership
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legal entity unto itself
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corporation
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form the corporation and specify the rights and limitations of the entity
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articles of incorporation
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income is taxed as direct income to the stockholders and thus is taxed only once; shareholders recieve limited liability
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Subchapter S Corporation
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examines the relationship between the owners and managers of the firm
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Agency Theory
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examples include pension funds and mutual funds; they own a large percentage of stock in major US companies
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institutional investors
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broad goal of the firm; maximize wealth of the shareholders
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Shareholder wealth maximization
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vast global network of individuals and financial institutions that may be lenders, borrowers, or owners of public companies worldwide
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financial markets
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financial markets include national, state, and local governments that are primarily borrowers of funds for highways, education, welfare, and other public activities
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public financial markets
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