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Intro to Business > Exam 2 > Flashcards

Exam 2 Flashcards

1
Q

stock exchange

A

organization whose members can buy and sell securities for the companies and investors

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2
Q

OTC market

A

exchange that provides a means to trade stocks not listed on the national exchanges

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3
Q

equity financing

A

money raised from within the firm from operations or through the sale of ownership in the firm (stock or venture capital)

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4
Q

debt financing

A

funds raised through various forms of borrowing that must be repaid

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5
Q

common stock

A

the most basic form of ownership in a firm; has voting rights, right to share in profits through dividends, if offered by the firm’s board of directors

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6
Q

preferred stock

A

stock that gives its owners preference in the payment of dividends and an earlier claim on assets than common stock holders if the company sells it’s assets

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7
Q

participating preferred stock

A

gives the holder the right to receive dividends equal to the normally specified rate that preferred dividends receive as well as an additional dividend based on some predetermined condition

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8
Q

convertible preferred stock

A

preferred stock that includes an option for the holder to convert the preferred shared into a fixed number of common shares

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9
Q

cumulative preferred stock

A

preferred stock whose annual fixed-rate dividend, if it cannot be paid in any year, accrues until it can and is paid before common dividends

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10
Q

mutual fund

A

an organization that buys stocks and bonds and then sells shares in those securities to the public

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11
Q

exchange-traded funds

A

collections of stocks that are traded on exchanges but are traded more like individual stocks than like mutual funds

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12
Q

long trading

A

buy low and sell high

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13
Q

short trading

A

sell high and buy low

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14
Q

margin trading

A

buy with partial down payment of at lease 50% (loan from broker)

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15
Q

options trading

A

right to buy or sell stock at a fixed price at a fixed date in the future (high risk)

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16
Q

bond

A

a corporate certificate indicating that a person has lent money to a firm

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17
Q

maturity date

A

the exact date the issuer of a bond must pay the principal to the bondholder

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18
Q

sinking fund

A

reserve account in which the issuer of a bond periodically retires some part of the bond principal prior to maturity so that enough capital will be accumulated by the maturity date to pay off the bond

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19
Q

corporate bond

A

bond issued by a corporation in order to raise financing for a variety of reasons (usually for longer-term debt and matures within a year)

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20
Q

municipal bond

A

a security issued by or on behalf of a local authority; usually exempt from federal taxes

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21
Q

agency bond

A

a security issued by a US govnt-sponsored agency or federal budget agency (backed by the govnt)

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22
Q

T-bill

A

matures in less than a year; issued with a minimum denomination of $1,000

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23
Q

treasury note

A

matures in 10 years or less; sold in denominations of $1,000 up to $1,000,000

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24
Q

treasury bonds

A

matures in 25 years or more; sold in denominations of $1,000 up to $1,000,000

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25
Q

Dow Jones Industrial Average

A

the average cost of 30 selected industrial stocks, used to give an indication of the direction of the stock market over time

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26
Q

bid & asked price

A

bid: most any buyer will pay
asked: least any seller is willing to accept

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27
Q

SEC

A

federal agency that has responsibility for regulating the various exchanges

28
Q

NASDAQ

A

nationwide electronic system that communicates over-the-counter trades to brokers

29
Q

federal reserve bank

A

regional bank of the federal reserve system, the central banking system of the US

30
Q

reserve requirement

A

central bank regulation employment by lost, but not all, of the world’s central banks, that sets the minimum fraction of customer deposits and notes that each commercial bank must hold, rather than lend out

31
Q

discount rate

A

interest rate that the Fed charges for loans to member banks

32
Q

open-market operations

A

the buying and selling of US govnt bonds by the Fed with the goal of regulating money supply

33
Q

FDIC (federal deposit insurance corp)

A

an independent agency of the US govnt that insures bank deposits

34
Q

commercial bank

A

a profit-seeking organization that receives deposits from individuals and corporations in the form of checking and savings accounts and then uses some of these funds to make loans

35
Q

investment bank

A

bank that purchases large holdings of newly issued shares and resells them to investors

36
Q

annual report

A

yearly statement of financial condition, progress, and expectations of an organization

37
Q

FASB (financial accounting standards board)

A

private, non-profit organization is to establish and improve accepted accounting principles within the US

38
Q

PCAOB (public company accounting oversight board)

A

private-sector, nonprofit corp created by SARBOX

39
Q

SARBOX

A

2002 federal law that set new accounting standards for publicly traded companies

40
Q

audit

A

job of reviewing and evaluating the informations used to prepare a company’s financial statements

41
Q

income statement

A

shows a firm’s profit after costs, expenses, and taxes

42
Q

statement of shareholders equity

A

represents the capital received from investors in exchange for stock

43
Q

balance sheet

A

assets, liabilities, and owners’ equity- reports a firm’s condition

44
Q

statement of cash flows

A

shows how changes in the BS and income affect cash

45
Q

accounting equation

A

assets= liabilities+SHE

46
Q

independent auditor’s report

A

evaluation and unbiased opinion about the accuracy of a company’s financial statements

47
Q

financial accounting

A

accounting information and analyses prepared for people outside of the organization

48
Q

managerial accounting

A

process of identifying, measuring, analyzing, interpreting, and communicating information

49
Q

GAAP

A

framework of accounting standards, rules, and procedures (US)

50
Q

IFRS

A

set of accounting standards developed by an independent, not-for-profit organization called IASB

51
Q

CPA

A

accounting professional

52
Q

CMA

A

professional designation in the accounting and finance world

53
Q

gross national product

A

total value of goods and services by a country during one year (equal to GDP plus the net income from foreign investments)

54
Q

gross domestic product

A

total value of goods and services in a country during one year

55
Q

frictional unemployment

A

entering work force or change of career

56
Q

structural unemployment

A

unemployment caused by restructuring or mismatch between skills

57
Q

cyclical unemployment

A

occurs bc of a recession or similar downturn

58
Q

seasonal unemployment

A

labor varies over the year

59
Q

consumer price index

A

monthly statistics that measure the pace of inflation or deflation

60
Q

producer price index

A

index that measures prices at the wholesale level

61
Q

exporting

A

selling products to another country

62
Q

international licensing

A

one company gives another company permission to manufacture its product for a specified payment

63
Q

international franchising

A

license that allows a franchisee to have access to a business’ proprietary knowledge and trademarks to provide a service under the business’ name

64
Q

FDI (foreign subsidiary)

A

controlling ownership i na business enterprise in one country by an entity based in another country

65
Q

international joint ventures

A

when two businesses based in two or more countries form a partnership

66
Q

countertrading

A

form of bartering where several countries may be involved in trading goods for goods or services for services

Intro to Business (6 decks)

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