| Primary goal of financial management | maximize the current value per share of the existing stock |
| Capital Budgeting | the process of planning and managing a firm’s long-term investments |
| Capital Structure | the mixture of debt and equity maintained by a firm |
| Working Capital Management | the managing of short-term assets and liabilities |
| A good example of a Pure discount loan, an Interest-only loan, and an Amortized loan is | Treasury bill, a corporate bond, and mortgage loan respectively |
| capital structure decision | determining how much debt should be assumed to fund a project |
| Sole proprietorship | owner is personally liable for all company’s debts |
| Amortized loans must have which one of these characteristics? | Either equal or unequal principal payments over the life of the loan |
| An example of capital budgeting decision is deciding | Whether or not to purchase a new machine for the production line |
| What will increase the present value of an amount to be received sometimes in the future | A decrease in the interest rate |
| Working Capital management decisions include determining | The minimum level of cash to be kept in a checking account |
| Ratios that measures a firms liquidity are known as …. ratios | Short-term solvency |
| Seconds markets | securities are bought and sold after the original sale |
| Dealer Markets (OTC) | Electronic trading |
| Auction markets (exchanges) | Physical locationMatch buyers and sellersNYSE (fewer firms, but much larger firms) |
| Primary markets | markets in which corporations raise capital by issuing new securities |
| Liquidity Ratios | Measures of the short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash. |
| Debt Management Ratios | degree to which a firm can meet it’s long-term financial obligations |
| asset management ratios | A set of ratios that measure how effectively a firm is managing its assets. |
| Profitability Ratios | measure the income or operating success of a company for a given period of time |
| Market Value Ratios | Ratios that relate the firm’s stock price to its earnings and book value per share. |
