value of an annuity of n periods.
value of a stock or bond.
company; a firm which controls another firm by owning a large block
of its stock.
business owned by two or more persons.
of time required for an investment's net revenues to cover its cost.
designates equal cash flows coming at regular intervals.
on which a firm actually mails dividend checks.
when a country establishes a fixed exchange rate with another major
currency; consequently, values of pegged currencies move together over
when the gain or loss on the hedged transaction exactly offsets the
loss or gain on the unhedged position.
which is awarded to executives on the basis of the company's performance.
assets that a firm must carry even at the trough of its cycles.
of equal payments expected to continue forever.
which will seriously hurt a company if it is acquired by another.
actions by a host government which would reduce the value of a company's
of the actual versus the expected results for a given capital project.
balance held in reserve for random, unforeseen fluctuations in cash
inflow and outflows.
in the corporate charter or bylaws that gives common stockholders the
right to purchase on a pro rata basis new issues of common stock (or
that sells above its par value; occurs whenever the going rate of interest
falls below the coupon rate.
on Forward Rate
when the spot rate is greater than the forward rate.
today of a future cash flow or series of cash flows.
Value Interest Factor for an Annuity (PVIFAi,n)
value interest factor for an annuity of n periods discounted at i percent.
Value Interest Factor for i and n (PVIFi,n)
value of $1 due n periods in the future discounted at i percent per
of the price per share to earnings per share; shows the dollar amount
investors will pay for $1 of current earnings.
in which firms issue new securities to raise corporate capital.
in which corporations raise capital by issuing new securities.
interest rate charged by commercial banks to large, strong borrowers.
of all possible outcomes, or events, with a probability (chance of occurrence)
assigned to each outcome.
available within an economy from investments in productive (cash-generating)
Corporation (Pro Association)
of corporation common among professional that provides most of the benefits
of incorporation but does not relieve the participants of malpractice.
Margin on Sales
measures income per dollar of sales; it is calculated by dividing net
income by sales.
of the firm's net income.
of ratios which show the combined effects of liquidity, asset management,
and debts on operating results.
system where the tax rate is higher on higher incomes. The personal
income tax in the United States, which goes form 0 percent on the lowest
increments of income to 39.6 percent, is progressive.
Cost of Capital, kp
cost of capital for an individual project.
specifying the terms and conditions of a loan including the amount,
interest rate, and repayment schedule.
gibing one person the authority to act for another, typically the power
to vote share of common stock.
by a person or group to gain control of a firm by getting its stockholders
to grant that person or group the authority to vote their shares to
place a new management into office.
to gain control of a firm by soliciting stockholders to vote for a new
that is owned by a relatively large number of individuals who are not
actively involved in its management.
where the same products cost roughly the same amount in different countries
after taking into account the exchange rate.
used for estimating the beta of a project in which a firm (1) identifies
several companies whose only business is the product in question, (2)
calculates the beta for each firm, and then (3) averages the betas to
find an approximation to its own projects beta.
to sell a share of stock at a certain price within a specified period.
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