Economics Chapter 7

Principal

1) An amount of money that is borrowed, as in a loan. 2) The face amount of a bond

Share

1) The smallest unit of ownership in a corporation, usually expressed as one share of stock 2)The portion of an owner's interest in a business

Corporate Bond

A bond that a corporation issues to raise money to expand its business

Franchise

A business established or operated under an authorization to sell or distribute a company's goods or services in a particular area

Partnership

A business in which two or more persons combine their assets and skills

Corporation

A business owned by stockholders who share in its profits but are not personally responsible for its debts.

Cooperative

A business that is owned by the members it serves and is managed in their interest.

Stock

A certificate of ownership in a corporation

Nonprofit Organization

A charity or other organization that does not seek to generate a profit through its activities

Subsidiary

A company that is completely controlled by another company

Articles of Incorporations

A document outlining a corporation's name, purpose, location, amount of stock to be issued, board of directors and other information about the conditions under which the business will operate; must be filled by a business in order to obtain a charter.

Board of Directors

A group of people elected by the stockholders of a corporation to set the policies for the corporation.

Vertical Combination

A merger between two or more companies involved in different production phases of the same good or service

Horizontal Combination

A merger between two or more companies producing the same good or service

Conglomerate Combination

A merger of companies producing unrelated products

General Partnership

A partnership in which all owners share in operating the business and in assuming liability for the business's debts.

Limited Partnership

A partnership with one or more general partners and one or more limited partners.

Dividend

A payment from profits by a company's Board of Director's to shareholders.

Collateral

A security pledged for the repayment of a loan

Preferred Stock

A special type of stock whose owners, though not generally having a say in running the company, have a claim to profits before other stockholders do.

Liability

An amount owed by a business.

Merger

Combination of two or more companies into a single firm

Common Stock

Corporation's basic ownership share; also generically called capital stock.

Zoning Laws

Legal restrictions on land use that determine what types of building and economic activities are allowed to take place in certain areas. In the United States, areas are most commonly divided into separate zones of residential, retail, or industrial use.

Longevity

Long life, long duration

Sole Proprietorship

Owned and run by one individual and in which there is no legal distinction between the owner and the business.

Corporate Charter

The document prepared when a corporation is formed setting forth the objectives and goals of the corporation as well as a complete statement as to what the corporation may and may not do while attempting to achieve these goals. A securities firm must obtain a copy of the corporate charter when a corporation opens a margin or options account

Interset

The financial return gained by investing or leading capital