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54 Cards in this Set
- Front
- Back
finance |
The knowledge, science, techniques, and art of managing money |
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financial markets |
Provide a forum where savers of funds and users of funds can transact business |
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Financial Institutions |
Intermediaries that allow for efficient transfer of the savings of individuals, governments, and business for financial securities |
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Financial services |
The part of finance concerned with design and delivery of advice and financial products to individuals, business, and government |
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Corporate finance |
Concerns the duties of the financial manager in the business firm |
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Financial manager |
Actively manages the financial affairs of any type of business, whether financial or non financial, private or public, large or small, profit-seeking, non-profit-seeking |
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Publicly traded company |
A company whose common shares are listed and trade on a recognized stock exchange |
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Sole Proprietorship |
A business owned by one person and operated for his or her own benefit |
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Unlimited Liability |
The condition of a sole proprietorship (or general partnership) allowing the owners total wealth to be taken to repay creditors |
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Partnership |
A business owned by two or more people and operated for profit |
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Partnership agreement |
The written contract used to formally establish a business partnership |
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Limited partnership |
A partnership with one or more general partners with unlimited liability and one or more limited partners with limited liability |
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Corporation |
A business entity created by law |
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Shareholders |
The owners of a corporation whose ownership or equity is evidenced by common shares |
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Common Shares |
The purest and most basic form of corporate ownership |
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Dividends |
Periodic distributions of earnings to the shareholders of a firm |
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Board of Directors |
Group elected by the firms shareholders and having ultimate authority to guide corporate affairs and set corporate strategy |
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President or Chief Executive Officer (CEO) |
Corporate official responsible for managing the firms day to day operations and carrying out the policies established by the board of directors |
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Income Trust |
Created through the conversion of a regular corporation to a trust structure where the business becomes a different type of legal entity, the benefit is a significant reduction in taxes |
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S&P/TSX Composite Index |
The measure of how the Canadian Stock market has done over a stated period of time, which may be a day, a week, a month, or a year, or number of years |
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Treasurer |
The officer responsible for the firms financial activities such as financial planning and fund raising, making capital expenditure decisions, and managing cash, credit, the pension fund, and foreign exchange |
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Controller |
The officer responsible for the firms accounting activities, such as corporate accounting, tax management, financial accounting, and cost accounting |
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Foreign Exchange Manager |
The manager responsible for monitoring and managing the firms exposure to loss from currency fluctuations |
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Marginal Analysis |
Economic principle that states that financial decisions should be made and actions taken only when the added benefits exceed the added costs |
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Accrual Basis |
Recognizes sales revenue at the time of sale and the expenses incurred to generate the sales |
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Cash Basis |
Recognizes revenues and expenses only with respect to actual inflows and outflows of cash |
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Capital Structure |
The mix of short and long term financing and the mix of debt and equity financing used in a company |
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Earnings Per Share (EPS) |
The amount earned during the accounting period on each outstanding common share, calculated by dividing the periods total earnings available for the firms common shareholders by the number of common shares outstanding |
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Risk |
The chance that actual outcomes may differ from those expected |
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Economic Value Added(EVA) |
EVA, a way to measure the value of a company is the difference between a companys net operating profit after tax and the total cost of invested capital |
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Stakeholders |
Groups such as employees, customers, suppliers, creditors, owners, communities, and others who have a direct economic link to the firm |
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Ethics |
Standards of conduct or moral judgement |
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Agency Problem |
The likelihood that managers may place personal goals ahead of corporate goals |
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Corporate goverance |
The set of actions and procedures common shareholders use to ensure they receive reasonable return on their investments in the company |
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Agency Costs |
The reduction in shareholders wealth due to agency problem |
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Incentive Plans |
Management compensation plans that tend to tie management compensation to share price,most popular incentive plan involves the grant of stock options |
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Stock Options |
An incentive allowing managers to purchase common shares at the market price set at the time of the grant |
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Performance Plans |
Plans that compensate managers on the basis of proven performance measured by EPS growth in EPS and other ratios of return. Performance shares and or cash bonuses are used as compensation under these plans |
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Performance Shares |
Common Shares granted to management for meeting stated performance goals |
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Cash bonuses |
Cash paid to management for achieving certain performance goals |
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Hostile Takeover |
The acquisition of the firm(the target) by another firm or group (the acquirer) that is not supported by management |
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Financial forcasting |
The process used to estimate the company's requirement for financing for a future time period |
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Money Market |
The market where debt securities that will mature within one year are traded |
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Capital Market |
The market that trades long-term securities and common and preferred equity securities |
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Primary Market |
The market where financial securities are initially issued and where the issuer receives the proceeds from the sale of the financial security |
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Secondary Market |
The market that allows the owner of the previously created financial security to sell this security or to buy more of this or other securities, or allows a buyer to express an interest in acquiring a financial security |
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Stock Exchange |
An actual, physical secondary market that allows investors to buy and sell preferred or common shares |
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Risk-return tradeoff |
The return expected depends on the amount of risk taken |
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Risk-averse |
The attitude toward risk in which a higher return would be expected if risk increased |
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Required rate of return |
The minimum return required given the risk of an investment;the great the risk of loss, the great the required return |
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Interest |
The return paid on debt financing |
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Interest Rate |
The cost of money. The greater the risk of the debt security, the higher the interest rate |
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Cost of Capital |
The overall cost to a company of a mix of debt and common equity financing |
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Capital budgeting |
The process of analyzing the investment in assets with an expected life greater than one year |