Second Half Flashcards
1
Q
What is the price of a current share of stock?
A
The present value of future dividends.
2
Q
What is a pie model?
A
A visual depiction of the firm that shows its full value as a circle with different claims dividing it into portions. Claims may be either marketable (stockholders) or non-marketers (government).
3
Q
What is ‘going on margin”?
A
Borrowing money from a broker to purchase stock.
4
Q
What is financial slack?
A
The unused debt capacity of a corporation, which can be used during difficult times.
5
Q
What is an exchange offer?
A
Ocurs when a firm offers to exchange stock for debt, or vice versa.
