Corporate Finance Overview

<p>They offer an investment opportunity without any commitment (D)</p> Signup and view all the answers

<p>To exercise control and influence over company decisions (B)</p> Signup and view all the answers

<p>The capital received above the par value for issued shares (C)</p> Signup and view all the answers

<p>Their influence is negligible without organized coalitions (A)</p> Signup and view all the answers

<p>Public non-voting shares (D)</p> Signup and view all the answers

<p>Subordinate Debt (A)</p> Signup and view all the answers

<p>Call Provision (A)</p> Signup and view all the answers

<p>To the holder of the bond (A)</p> Signup and view all the answers

<p>They can be converted into common shares. (A)</p> Signup and view all the answers

<p>Bonds with principal only, no coupons. (D)</p> Signup and view all the answers

<p>Debentures are unsecured long-term loans. (B)</p> Signup and view all the answers

<p>Sale of securities to a limited number of investors. (D)</p> Signup and view all the answers

<p>$140,225 (C)</p> Signup and view all the answers

<p>The shares' par value and the percentage entitlement (D)</p> Signup and view all the answers

<p>Cumulative Preferred Shares (A)</p> Signup and view all the answers

<p>They share the income with common shares after a fixed payment to common shareholders. (D)</p> Signup and view all the answers

<p>Voting privileges (A)</p> Signup and view all the answers

<p>The dividend rate is adjusted upward as a hedge. (B)</p> Signup and view all the answers

<p>50% (D)</p> Signup and view all the answers

<p>It remains constant at $2.00. (D)</p> Signup and view all the answers

<p>Dividends must be declared. (D)</p> Signup and view all the answers

<p>To allow gradual repayment of bond principal (D)</p> Signup and view all the answers

<p>95.40% (B)</p> Signup and view all the answers

<p>Lower risk and lower coupon rate (C)</p> Signup and view all the answers

<p>U.S. Equity (A)</p> Signup and view all the answers

<p>By using a forward contract (D)</p> Signup and view all the answers

<p>$1,464,706 Cdn (B)</p> Signup and view all the answers

<p>Intern. Amer.Cda.Bond Equity (C)</p> Signup and view all the answers

<p>2.04% (D)</p> Signup and view all the answers

<p>$1,501,324 (B)</p> Signup and view all the answers

<p>Money Market (B)</p> Signup and view all the answers

<p>Sinking fund assets are protected from bankruptcy claims (A)</p> Signup and view all the answers

<p>It stabilizes costs associated with currency fluctuations (D)</p> Signup and view all the answers

<p>980,392 Euros (C)</p> Signup and view all the answers

<p>$1,501,324 (B)</p> Signup and view all the answers

<p>1 Euro = $1.501 Cdn (D)</p> Signup and view all the answers

<p>Equity investments (D)</p> Signup and view all the answers

<p>The expected risk of non-payment (B)</p> Signup and view all the answers

<p>Cumulative Shares (A)</p> Signup and view all the answers

<p>American Equity (A)</p> Signup and view all the answers

<p>They are sold at a discount and do not pay interest (B)</p> Signup and view all the answers

<p>Foreign Borrowing (B)</p> Signup and view all the answers

Common shares that are currently held by investors.

The maximum number of shares a company is permitted to issue.

A voting method where shareholders can concentrate all their votes on one director.

A document allowing one shareholder to vote on behalf of another.

Investment instruments giving the buyer the right (not obligation) to buy shares at a specific price.

The total pay given to the top executives in a company.

Basic equity ownership in a company.

A nominal value assigned to a share, often a small amount.

Warrants experience larger price swings than the underlying stock.

Preferred shareholders receive dividends before common shareholders.

These shares accumulate unpaid dividends that must be paid before common shareholders receive any.

These shares receive dividends only when declared by the company.

These shares receive a fixed dividend, then share in any remaining profits after common shareholders receive their fixed amount.

Dividend rate tied to prime interest rates; protects investors from inflation/falling values.

Earnings Before Interest and Taxes (EBIT); core profitability measure.

Preferred shares often include call options or retraction clauses, convertability to common stock, and rarely voting rights.

The order in which different types of claims are paid during a company's financial distress.

The cost of borrowing money, paid on debt instruments. (Coupon and Maturing debt).

Types of debt instruments that represent a loan made to a company.

Gives the issuer the right to buy back the bond before maturity.

Sale of securities to a limited number of investors, not offered publicly.

Bonds that can be exchanged for company stock at a predetermined price.

Bonds with the principal and interest portions separated for trading.

A comparison of interest rates over varying investment periods.

The process of dividing investments among different asset classes, like stocks, bonds, and cash, to manage risk and achieve specific financial goals.

A type of investment fund that primarily invests in stocks or shares of companies.

A type of investment fund that primarily invests in bonds, which represent debt securities.

A type of investment fund that invests in short-term, low-risk debt instruments, offering stability and liquidity.

Measures how well a mutual fund has grown in value over a specific period, typically expressed as a percentage return.

A bond that requires the issuer to make regular payments into a special fund to ensure they can repay the bond principal at maturity. These payments are made to a trustee who invests the funds prudently.

Sinking fund bonds have a lower risk profile than traditional bonds because the issuer sets aside funds to repay the principal, making it less likely they'll default.

Borrowing in a foreign currency and using a forward contract to lock in the exchange rate to protect against currency fluctuations.

Borrowing in a foreign currency without using any hedging instruments, exposing the borrower to the risk of unfavorable exchange rate movements.

An agreement to buy or sell a specific amount of currency at a predetermined exchange rate on a future date.

The current exchange rate for a pair of currencies.

A company needs to pay 1 million Euros in 6 months and wants to lock in the cost today using a forward contract to hedge against exchange rate changes.

Calculate the Euros needed today to equal the future Euro payment, convert the Euros amount to Canadian dollars using the spot rate, and find the total cost of borrowing the Canadian dollar equivalent for 6 months.

A process where companies sell secure receivables (like credit card receipts or rental income) to raise cash, usually for buying assets. The cash from these receivables is valued using their present value, adjusted for the risk of non-payment.

The rate at which currencies will be exchanged at a future date. This rate is agreed upon today, securing a price for future transactions.

A transaction where a company uses financial instruments to reduce the risk of currency fluctuations. For example, buying a forward contract can protect against losses from a weakening currency.

A transaction where a company exposes itself to the potential risks of currency fluctuations. The outcome is uncertain and depends on the future movement of exchange rates.

Securitization is used to raise cash, typically for acquiring capital assets like buildings or equipment. It's a way to convert future income streams into immediate funds.

Common examples include credit card receipts, rental income, royalties, and installment payment contracts. These are all future payments that can be sold to raise cash.

The value of the receivables is adjusted for the risk of non-payment. This means calculating the likelihood of customers not paying their debts, so the company accounts for potential losses.

It's a rate set today for exchanging currencies at a specific future date. It's essential for companies doing business in foreign currencies as it helps protect them from future fluctuations in exchange rates.