Introductory terms & concepts-FINAN 450(#2)

cmarquardt94's version from 2017-01-19 22:13

Section 1

Question Answer
stock?fractional ownership of a corporation
bond?debt issue; bondholders are creditors; interest is an expense
Capital asset?a long term asset like (land) or (machinery); could be intangible too
Financial Instrument?a claim on assets or cash flows(stocks, bonds)
Capital?funds to be used for long-term investing
Money?funds to be used for short-term investing or expenses

Section 2

Question Answer
Residual cash flows?funds left after operating expenses, creditors, and taxes have been paid
Residual cash flows can be...?paid to owners as (dividends) or reinvested in the company
Two types of cash flows to investors?capital gains & income
what are Capital gains?change in value of a long-term investment
income?short-term cash flow from an investment