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Managerial Finance > Ch 6 > Flashcards

Ch 6 Flashcards

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1
Q

when a company or government wishes to borrow money from the public, it issues/sells debt securities called…

A

bonds

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2
Q

price a dealer is willing to pay for a bond

A

bid price

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3
Q

price a dealer is willing to sell for a bond

A

ask price

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4
Q

brand new bond, never been issued

A

Primary Bond

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5
Q

used bond

A

Secondary Bond

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6
Q

issued by corporations, sold to investors

A

Corporate Bonds

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7
Q

less risky than a corporate bond. used to support gov spending

A

Government Bond

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8
Q

Government bond with 10+ years to maturity

A

US Treasury Bond

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9
Q

Government bond with 1-10 years to maturity

A

US Treasury Note

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10
Q

Government bond with 1 year or less to maturity

A

US Treasury Bill

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11
Q

City or local bond

A

Municipal Bond

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12
Q

Types of Municipal Bonds

A

General obligation, Revenue Bond, International Bond

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13
Q

date on which the principal of bond is repaid

A

Maturity

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14
Q

bond agreement

A

Indenture

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15
Q

unsecured debt of 10 years or more

A

Debenture

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16
Q

Unsecured debt of 10 years or less

A

Note

17
Q

No record of ownership

A

Bearer form Bond

18
Q

tracks ownership (issuer tracks)

A

Registered Form Bonds

19
Q

allows a company to repurchase at a pre-specified price

A

Call Provisions

20
Q

prohibits company from re-purchasing before specific date

A

Deferred Call Provision

21
Q

Annual or semi-annual interest paid

A

Capital

22
Q

no interest paid; deep discount for selling price

A

Zero Corporates

23
Q

the amount at end of bond (1000)

A

face value

24
Q

interest paid on terms of a % (coupon/face value)

A

coupon rate

25
Q

an equity security that represents ownership in a corporation

A

stock

26
Q

a primary factor used in valuing stocks

A

dividends

27
Q

details, terms, conditions (SPA)

A

Stock Purchase Agreement

28
Q

equity without priority in dividends. have voting rights and elect a board of directors

A

common stock

29
Q

right for someone else to vote on your behalf

A

proxy

30
Q

equity with priority in dividends

A

preffered stock

31
Q

must make goods on missed dividends

A

cumulative

32
Q

don’t need to pay missed dividends

A

non-cumulative

33
Q

no inventory, rather they connect buyers and sellers

A

brokers

34
Q

maintain own inventory of stocks they buy and sell

A

dealers

35
Q

oldest US stock exchange

A

New york stock exchange (NYSE)

36
Q

national association of sec dealer, automated quotation system

A

NASDAQ

37
Q

a variable rate coupon which adjusts with market interest rates

A

floating rate

Managerial Finance (6 decks)

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