BA 101

the act of borrowing funds

long-term funds

assets of the borrower that are transferred to the lender if the borrower defaults on the loan

the rate of interest typically charged on loans to the most creditworthy firms that borrow

long-term debt securities (IOU's) purchased by investors

the amount that bondholders receive at maturity

a legal document that explains the firm's obligations to bondholders

bonds backed by collateral

bonds that are not backed by collateral

provides the issuing firm with the right to repurchase its bonds before maturity

restriction imposed on specific financial policies of a firm that has issued bonds

a short-term debt security normally issued by firms in good financial condition

financial institutions that obtain deposits from individuals and use the funds primarily to provided business loans

financial institutions that obtain deposits from individuals and use the deposited funds primarily to provide mortgage loans

financial institutions that typically obtain funds by issuing debt securities (IOU's) and lend most of their funds to firms

receive employee and firm contributions toward pensions and invest the proceeds for the employees until the funds are needed

receive insurance premiums from selling insurance to customers and invest the proceeds until the funds are needed to pay insurance claims

investment companies that receive funds from individual investors and then pool and invest those funds in securities

investment companies that invest the funds received from investors in bonds

the act of receiving investment from owners (by issuing stock or retaining earnings)

the decision regarding how much of the firm's quarterly earnings should be retained (reinvested in the firm) versus distributed as dividends to owners

a security that represents partial ownership of a particular firm

a security that represents partial ownership of a particular firm and offers specific priorities over common stock

a firm composed of individuals who invest in small businesses

the first issue of stock to the public

investment companies that invest funds received from individual investors in stocks

a market where existing securities can be traded among investors

the selling of securities to the public

the investment bank guarantees a price to the issuing firm, no matter what price the securities are sold for

the investment bank does not guarantee a price to the firm issuing securities

a group of investment banks that share the obligations of underwriting securities

a document that discloses relevant financial information about securities and about the firm issuing them

costs of issuing securities; include fees paid to investment banks for their advice and efforts to sell the securities, printing expenses, and registration fees

the selling of securities to one or a few investors

renting assets for a specified period of time

the amount of debt versus equity financing

provides additional time for a firm to generate the necessary cash to cover its payments to tis creditors

specifies that a firm will provide its creditors with a portion of what they are owed

creditors may informally request that a failing firm liquidate (sell) its assets and distribute the funds received from liquidation to them

the amount of funds that would be received as a result of the liquidation of a firm