STOCKS AND BONDS + LOANS AND AMORTIZATION Flashcards
form of equity financing by allowing investors to be part of company
stocks
debt financing / raising money by borrowing from investors
bonds
high risk, high reward
stocks
low risk, low reward
bonds
ratio of annual dividend per share and market value per share
stock yield ratio / current stock yield
original amount of money borrowed by the company
par / face value
dividend = _____ x _____ x _____
dividend percentage, par value, # of shares
dividend per share / market value
stock yield ratio / current stock yield
periodic interest payment that the bondholder receives during time between purchase date and maturity date
coupon
coupons are usually received __________
semi-annually
P = F
par
P < F
discount
P > F
premium
present value of all cash inflows to the bondholder
fair price of a bond
amount of semi-annual coupons = [(_____) x (_____)] / _
par / face value, coupon rate, 2
distribution of company’s profits to shareholders
dividends
investor has preferential rights over common shareholders to dividends and company assets
preferred stock
investor has voting rights and shares directly in the success / failure of business
common stock
method of paying a loan through installment
amortization
Loan Types (3)
- Business
- Consumer
- Collateral
- loan secured by collateral
- borrower is obliged to pay at specific terms
collateral
mortgage on movable property
chattel mortgage
any remaining debt
outstanding balance
