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18 Cards in this Set
- Front
- Back
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what are the advantages of corporations over proprietorship? |
the advantages of corporations over proprietorship that it doesn't have a limited life and has limited liability |
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what is the primary financial goal of corporate management? |
the primary financial goal of corporate management is to maximize shareholder's wealth |
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what is an IPO(initial public offering)? |
an IPO is when a company initially offers its stock to the public |
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what are the advantages of proprietorships and partnership over corporations? |
the advantages are no corporate income tax, subject to less regulations, and ease of information |
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what are the disadvantages of proprietorships and partnerships? |
it's difficult to raise capital, has unlimited liability, and limited life |
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what are the disadvantages of corporation? |
the disadvantages are double taxation and the cost of setup and report filing |
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intrinsic value |
the actual value of something such as company or an asset. The acutal value may or may not be the same as the current market value |
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what factors affect managerial behavior? |
the factors are: Managerial compensationpackages Direct intervention byshareholders The threat of firing The threat of takeover |
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which person is to prefer riskier projects because they receive more upside if the project succeeds? Stockholder or bondholders? |
stockholder because bondholders receive fixed payments and are more interested in limiting risk |
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Managers arenaturally inclined to act in their own best interests (which are not always thesame as the interest of stockholders) |
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what is a market? |
Amarket is a venue where goods and services are exchanged. |
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what's a financial market? |
•aplace where individuals and organizations wanting to borrow funds are broughttogether with those having a surplus of funds. |
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what are derivatives? |
•aplace where individuals and organizations wanting to borrow funds are broughttogether with those having a surplus of funds. |
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what's behavioral finance? |
when an investor makes systematic mistakes that lead to inefficiencies |
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balance sheet |
providesa snapshot of a firm’s financial position at one point in time |
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income statement |
providesa snapshot of a firm’s financial position at one point in time |
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statement of cash flows |
•reports the impact of a firm’s activitieson cash flows over a given period of time |
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Statementof stockholders’ equity |
•shows how much of the firm’s earningswere retained, rather than paid out as dividends. |
