Business Sector

Question 1

firm

Answer 1

an institution that hires productive resources and that organizes those factors to produce and sell goods and services

Question 2

firm

Answer 2

business organization which owns and operates plants

Question 3

plant

Answer 3

physical structures or location where business is conducted

Question 4

industry

Answer 4

group of related firms which produce similar products

Question 5

sole proprietor ship

Answer 5

business owned by a single individual

Question 6

partnership

Answer 6

two or more individuals own and operate business in a partnership agreement

Question 7

corporation

Answer 7

formed by charter granted by government

Question 8

stock gives equity

Answer 8

equity gives ownership in a business

Question 9

initial public offering (IPO)

Answer 9

primary

Question 10

dividends

Answer 10

money given for success to stockholder

Question 11

stock split

Answer 11

as of that day a stockholder will get more of a stock

Question 12

p/e ration

Answer 12

price/net earnings

Question 13

cumulative

Answer 13

when dividends skipped amount accumulated and firm cant pay any dividend to common stock holders until all accumulated dividends paid to preferred stock holders

Question 14

IOU

Answer 14

long-term debt of corporation

Question 15

maturity date

Answer 15

when borrows must pay back principal (usually 10-20 years)

Question 16

par value

Answer 16

amount to be repaid when bond matures (principal)

Question 17

coupon rate

Answer 17

annual interest paid on bond, expressed in terms of % of bond’s par value

Question 18

debentures

Answer 18

bonds secured only by reputation of company

Question 19

bond is retired

Answer 19

paid off by maturity date

Question 20

bonds

Answer 20

usually issued in series each series has a unique maturity date and coupon rate to ensure that all bonds are not due at once

Question 21

yield

Answer 21

coupon payment/ price paid (bond)

Question 22

payoff

Answer 22

bonds, preferred stock. common stock

Question 23

callable bonds

Answer 23

have provisions for early redemption

Question 24

convertible bonds

Answer 24

option of being converted into a set number of common stocks

Question 25

LLC

Answer 25

limited liability corporation

Question 26

S corporation

Answer 26

smaller corporation-35 or fewer employees

Question 27

vertical combination

Answer 27

multi-plant firm in which company owns plants at different production stages

Question 28

horizontal combination

Answer 28

multi-plant firm with plants performing the same manufacturing process

Question 29

conglomerate

Answer 29

firm that owns plants in different industries or markets