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Finance 01
Chapter 1 terms
Question | Answer |
---|---|
business ethics | A company's attitude and conduct toward its employees, customers, community, and stockholders. |
corporate raider | An individual who targets a corporation for takeover because it is undervalued |
corporation | A legal entity created by a state, separate and distinct from its owners and managers, having unlimited life, easy transferability of ownership, and limited liability. |
equilibrium | The situation in which the actual market price equals the intrinsic value, so investors are indifferent between buying or selling a stock. |
hostile takeover | The acquisition of a company over the opposition of its management. |
intrinsic value | An estimate of a stock's "true" value based on accurate risk and return data. The intrinsic value can be estimated but not measured precisely. |
Limited Liability Company (LLC) | A relatively new type of organization that is a hybrid between a partnership and a corporation |
Limited Liability Partnership (LLP) | like partnerships. |
marginal investor | An investor whose views determine the actual stock price. |
market price | The stock value based on perceived but possibly incorrect information as seen by the marginal investor. |
partnership | An unincorporated business owned by two or more persons. |
propietorship | An unincorporated business owned by one individual. |
S corporation | A small corporation that, under Subchapter S of the Internal Revenue Code, elects to be taxed as a proprietorship or a partnership, rather than a corporation, yet retains limited liability and other benefits of the corporate form of organization. |
Sarbannes-Oxley Act | A law passed by Congress that requires the CEO and CFO to certify that their firm's financial statements are accurate. |
Shareholder Wealth Maximization | The primary goal for managers of publicly owned companies implies that decisions should be made to maximize the long-run value of the firm's common stock. |