CH1+2 Finance (Book) Flashcards
Capital Budgeting
In what long-lived assets should the firm invest?
Capital structure
How can the firm raise cash for required capital expenditures?
How should short-term operating cash flows be managed?
Net working capital
Most important goal of a company
Maximise value to shareholders (they are only paid once stakeholders have been served)
Money markets
- markets for debt securities that will pay off in the short term
- are dealer markets
Capital markets
markets for long-term debts and for equity shares
Auction market
supply and demand come together in one regulated market
Dealer market
- secondary market
- no central location
- money markets are dealer markets
- dealers is a principal in most transactions
- dealer makes continuous quotations of prices for which they stand ready to buy and sell short-term financial instruments for their own inventory and at their own risk. (a dealer buys and sells securities)
Auction market
- secondary market
- Auction markets take place at a single location
- Transactions of the auction market are directly made publicly available
- the agent in an agency market like the stock broker does not acquire the securities
What are creditors?
People or institutions that buy debt from (i.e. its buildings, land and inventory)
Price quotation
Kostenvoranschlag, Preisangabe
cotización del precio
The Primary Market
initial sell of securities.
- public offerings and private placements
private placements
Raising adequate capital is integral to building and growing a business, and companies usually go the initial public offering (IPO) route. An alternative is the capital raising event known as a private placement. A private placement involves the sale of securities to a relatively small number of select investors. Investors targeted include wealthy accredited investors, large banks, mutual funds, insurance companies and pension funds.
Syndicate
A syndicate is a temporary, professional financial services alliance formed for the purpose of handling a large transaction that would be hard or impossible for the entities involved to handle individually.
OTC
over-the-counter market
are dealer markets in equities and long-term debt
- no physical location
