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69 Cards in this Set
- Front
- Back
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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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The markets in which participants agree today to buy or sell an asset at some future date
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Futures Markets
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The financial markets in which funds are borrowed or loaned for short periods of time, less than one year
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Money Markets
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The 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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Markets in which transactions are worked out directly between two parties
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Private Markets
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Markets in which standardized contracts are traded on organized exchanges
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Public Markets
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Any financial asset whose value is derived from the value of some "underlying" asset
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Derivative
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An organization that underwrites and distributes new investment securities and helps businesses obtain financing
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Investment Banking House
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Traditional department store of finance serving a variety of savers and borrowers
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Commercial Bank
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A firm that offers a wide range of financial services including investment banking, brokerage operations, insurance, and commercial banking
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Financial Services COrporation
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organizations that pool investor funds to purchase financial instruments thus reduce risks through diversification
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Mutual Funds
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mutual funds that invest in short term low risk securities and allow investors to write checks against their accounts
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Money Market Funds
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Formal organizations having tangible physical locations that conduct auction markets designated "listed" securities
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Physical Location Exchanges
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A large collection of brokers and dealers, connected electronically by telephones and computers, that provides for trading in unlisted securities
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Over the counter market (OTC)
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includes all facilities that are needed to conduct security transactions not conducted on the physical location exchanges
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Dealer Market
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A corporation that is owned by a few individuals who are typically associated with the firm management
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Closely Held Corporation
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A corporation that is owned by a relatively large number of individuals who are not actively involved in its management
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Publicly Owned Corporation
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THe act of selling stock to the public at large by a closely held corporation or its principal stockholders
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Going Public
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Traditional department store of finance serving a variety of savers and borrowers
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Commercial Bank
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A firm that offers a wide range of financial services including investment banking, brokerage operations, insurance, and commercial banking
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Financial Services COrporation
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organizations that pool investor funds to purchase financial instruments thus reduce risks through diversification
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Mutual Funds
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mutual funds that invest in short term low risk securities and allow investors to write checks against their accounts
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Money Market Funds
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Formal organizations having tangible physical locations that conduct auction markets designated "listed" securities
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Physical Location Exchanges
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A large collection of brokers and dealers, connected electronically by telephones and computers, that provides for trading in unlisted securities
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Over the counter market (OTC)
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includes all facilities that are needed to conduct security transactions not conducted on the physical location exchanges
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Dealer Market
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A corporation that is owned by a few individuals who are typically associated with the firm management
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Closely Held Corporation
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A corporation that is owned by a relatively large number of individuals who are not actively involved in its management
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Publicly Owned Corporation
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THe act of selling stock to the public at large by a closely held corporation or its principal stockholders
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Going Public
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The market for stocks of companies that are in the process of going public
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Initial Public Offering Market
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THe hypothesis that securities are typically in equilibrium, that they are fairly priced in the sense that the price reflects all publicly available information on each security
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Efficient Markets Hypothesis
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Incorporates elements if cognative psychology into finance in an effort to better understand how individuals and entire markets respond to different circumstances
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Behavioral Finance
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A report issued annually by a corporation to its stockholders. it contains basic financial statements as well as managements analysis of the firms past operations and future prospects
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annual report
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A statement of the firms financial position at a specific point in time
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Balance Sheet
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that a portion of the firms earning that has been saved rather than paid out as dividends
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Retained Earnings
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The capital supplied by common stockholders, common stock, paid in cap, retained earnings, and occasionally, certain reserves
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Common Equity(Net Worth)
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Defined as current assets minus current liabilities, it is a frequently used measure of liquidity
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Net working Capital
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A report summarizing the firms revenues and expenses during an accounting period, generally a quarter or a year
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Income Statement
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The change to reflect the cost of assets used up in the production process, Not a cash outlay
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Depreciation
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Physical assets such as plant and equipment
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Tangible Assets
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A non-cash charge similar to depreciation except that it is used to write off the costs of intangible assets
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Amortization
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Assets such as patents, copyrights, trademarks, and goodwill
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Intangible Assets
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Earnings before interest, taxes,depreciation,and amortization
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EBITDA
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The actual net cash, as opposed to accounting profit (net income), that a firm generates during a specified period
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Net Cash Flow
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A firms net income as reported on its income statement
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Accounting Profit
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A statement reporting the impact of a firms operation, investing, and financing activities on cash flows over an accounting period
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Statements of cash flows
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A statement reporting how much of the firms earnings were retained in the business rather than paid as dividends. the balance sheet number reported for retained earnings is the sum of the annual retained earnings for each year of the firms history
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Statement of retained earnings
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Operating working capital less accounts payable and accruals, it is the working cap acquired with investor supplied funds
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Net Operating Capital (NOWC)
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THe profit a company would generate if it had no debt and held only operating assets
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Net Operating Profit after taxes (NOPAT)
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The cash flow actually available for distrubution to all investors (stockholders and debt holders) after the company has made all the investments in fixed assets, new products, and working capital necessary to sustain ongoing operations
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Free Cash Flow
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The excess of the market value of equity over its book value
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Market value added (MVA)
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Excess of NOPAT over capital costs
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Economic value added (EVA)
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AN unincorporated business owned by one individual
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Proprietorship
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AN unincorporated business by tow or more persons
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Partnership
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A legal entity created by a state, separate and distinct from its owners and managers, having unlimited life, easy transferability or ownership, and limited liability
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Corporation
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A special designation that allows small businesses that meet qualifications to be taxed as if they were a proprietorship or partnership rather than as a corporation
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S Corporation
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The primary gaoil for managerial decisions, considers the risk and timing associated with expected earnings per share in order to maximize the price of the firms common stock
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Stockholder Wealth Maximization
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an estimate of a stocks "true" value based on accurate risk and return data. This can be estimated but not measured precisely
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Intrinsic value
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The stock value based on perceived but possibly incorrect information as seen by the marginal investor
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Market Price
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The situation in which that actual market price equals the intrinsic value, so investors are indifferent between buying or selling a stock
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Equilibrium
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A company attitude and conduct toward its employees, customers, community, and stock holders
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Business ethics
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An individual who targets a corporation for takeover because its undervalued
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Corporate Raider
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The acquisition of a company over the opposition of its management
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Hostile Takeover
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The person most responsible for the firms strategic policies
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CHairman of the board
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A committee that consists of three outside (non-employee) directors who set the compensation package for senior officers
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Compensation Committee
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Heads the management team, and ideally is separate from the chairman of the board
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CEO
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In charge of the firms actual operations
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COO
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Responsible for the accounting system, raising capital, and evaluating major investment decisions and the effectiveness of operations
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CFO
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