Study BUS 420 - Exam 2 Flash Cards

 
Pile Management Card
BUS 420 - Exam 2

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Coupon
The stated interest payment made on a bond
Absolute Priority Rule
The list that establishes the order of claims in a liquidation.
Bankruptcy
a legal process for liquidating or reorganizing a business.
Financial Risk
Equity Risk that comes from the capital structure of a firm.
Business Risk
Equity risk that comes from the nature of a firm's operating activities.
Erosion`
a reduction in the sales of a current product whenever a new product is introduced.
Opportunity Cost
The most valuable alternative that is given up if a particular investment is taken.
Sunk Cost
A cost that has already been incurred and cannot be recouped.
Discounted Cash Flow
The process of valuing an investment by discounting its future cash flows.
Net Present Value
Defined as the difference between an investment's market value and cost.
Broker
An agent who arranges security transactions among investors.
Preferred Stock
Stock that pays a fixed dividend and receives priority in payment of dividends.
Capital Gains Yield
The rate at which the value of an investment grows.
Dividends
Payments to shareholders by a corporation that represents a return on capital.
Dividend Yield
Next year's dividend divided by today's stock price
Zero Growth
A stock that pays a constant dollar dividend over an extended period of time.
Fisher Effect
Examines relationship between: inflation, real, and nominal rates.
Nominal Rates
The rate of return you can earn on an investment before adjusting for inflation.
Real Interest Rate
Interest rate that has been adjusted for inflation.
Sinking Fund
An account managed by a bond trustee for the purpose of redeeming bonds early.
Note
an unsecured debt that matures in less than 10 yrs.
Debenture
An unsecured debt that generally matures in ten or more years
Bond Indenture
written agreement between the corporation and its creditors
Discount Bond
Bond that sells for less than face value
Premium Bond
bond where par value exceeds face value
Yield to Maturity
the rate required in the market on a bond
maturity
the date on which the principal amount of a bond is paid
Face Value
The principal amount of a bond that is repaid at the end of the term.
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