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Managerial Finance
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Managerial Finance
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25 Questions

1. An unsecured type of bond that pays interest only when the debtor company has positive earnings.

2. Selling stock anytime after initial time

3. Assumes that the stock will pay the same dividend each year - year after year

4. The rate that creates equilibrium between the supply of savings and the demand for investment funds in a perfect world - without inflation - where suppliers and demanders of funds have no liquidity preferences and there is no risk

5. Periodic payments of profit to the shareholders

6. Are provisions in a bond indenture that place operating and financial constraints on the borrower

7. Money has a time value - Risk requires a reward - Cash flow is what matters - Market prices are generally correct - and Conflicts of interest create agency problems.

8. First time selling stock - indirectly with financial intermediary - indirectly with investment bank

9. A widely cited dividend valuation approach that assumes that dividends will grow at a constant rate - but a rate that is less than the required return.

10. Interest compounds four times per year.

11. Privately raised external equity capital used to fund early-stage firms with attractive growth prospects.

12. Issued shares of common stock held by the firm; often these shares have been repurchased by the firm.

13. A paid individual - corporation - or commercial bank trust department that acts as the third party to a bond indenture and can take specified actions on behalf of the bondholders if the terms of the indenture are violated

14. Providers of venture capital; typically - formal businesses that maintain strong oversight over the firms they invest in and that have clearly defined exit strategies.

15. Is usually applied to equity instruments such as common stock; the cost of funds obtained by selling an ownership interest.

16. Is a complex and lengthy legal document stating the conditions under which a bond has been issued.

17. The current dollar value of a future amount - the amount of money that would have to be invested today at a given interest rate over a specified period to equal the future amount.

18. Stock that gives its owners preference in the payment of dividends and an earlier claim on assets than common stockholders if the company is forced out of business and its assets sold.(not voted)

19. Ownership in a Corporation (stock)

20. Inflation - opportunity cost - risk

21. Planning the long-term investments - $ coming in > $ going out

22. A portion of a security registration statement that describes the key aspects of the issue - the issuer - and its management and financial position

23. When interest is credited twice a year.

24. Mixture of debt and equity to finance long-term investments

25. Is preferred stock with no stated face value but with a stated annual dollar dividend