Econ 4 final 2

pension plan

a contractual agreement between an employer and its employees for the employer to provide benefits to employees after they retire

separate legal entity

a corporation condicts its affoiars with the same rights, duties, and respnsibilites of a person. It takes actions through its agents, who are its officers and managers

Unsecured bonds

also called debentures, are backed by the issuer's general credit standing

organization expences

also called organization costs, are the costs to organize a corporation.

stockholders equity

also called shareholders equity or corporate capital

par value of a bond

also called the face amount or face value, is paid at a specific future date known as the bond's maturity date.

par value

amount assigned per share by the corporation in its charter

premium on bonds

amount by which the bond price exceeds par value

subordinated debentures

are liabilities that are not repaid until the claims of the senor, unsecured liabilities are sealed.

registered bonds

bonds issued by name and adress

ease of capital accumulation

buying stock is attractive to investors because stockholders are not liable for the corporations acts and debts, stocks usually are transfered easily.

convertible bonds

can be exchanged for a fixed number of shares of the issuers corporation's comon stock

disadvantages of bonds

can decrease return on equity, bonds require payment of both periodic interest amd the par value at maturity

lease

contractual agreement between a lessor(asset owner) and a lessee(asset renter or tenant) that grants the lessee the right to use the asset for a period of time in return for cash payments

continuous life

corporation life continues indefinitly becuase it is not tied to the physical lives of its owners

government regulation

corporation must meet requirments of a state's incorporation laws, which subject the corporation to state regulation and control.

treasure stock

corporations reacquired shares

dividend payments include

date of declaration, date of record, and date of payment

carrying(book) value of bonds

discount deducted from the par value of bonds to yeild

advantages of bonds

do not effect owner control, interest on bonds is tax deductible, bonds increase return on equity

proxy

document that gives a designated agent the right to vote the stock

cumulative prefered stock

has right to be paid both the current and all prior periods unpaid dividends before any dividend is paid to common stockholders.

callable bonds

have an option exercisble by the issuer to retire them at a stated dollar amount before maturity

bond certificate

includes specifics such as the issuer's name, the par value, the ontract interest rate, and the maturity date.

bond

is its issuer;s written promise to a pay amount identified s the par value of the bond

bearer bonds

known as unregistered bonds, are paybale to who ever hold the bond

minimum legal capital

least amount that the buyers of stock contribute to the corporation or be subjected to paying at a further date

mortgage

legal agreement that helps protect a lender if a borrower fails to make required payments on notes or bonds.

capital leases

long term no cancel able leases by which lessor transfers substantially all risks and rewards to lessee

serial bonds

mature at more than on date

debt-to- equity ratio

measure to assess the risk of a company's financing structure

straight-line bond amortization

method allocates an equal portion of the total bond interest expense to each interest period

installment note

obligation requiring a series of payments to the lender

discount on bonds payable

occurs when a company issues bonds with a contract rate less than the market rate

common stock

one class of stock

effective interest method

or interest method, allocates total bond interest expense over the bond's life in a way that yields a constant rate of interest

market value per share

price at wich stock is bought and sold

preemptive right

protects stockholders interst in corporations

sinking fund bonds

reduce the holder's risk require the issuer to create a sinking fund of assets set aside at specified amounts and dates to repay bonds

indirect method

reports net income and then adjusts it for items necessary to obtain

term bonds

scheduled for maturity on on e specified date

direct method

separately lists each major item of operating cash receipts and major item of operating cash payments

annuity

series of equal payments at equal time intervals

operting leases

short term or cancable leases in which the lessor retains the risks and rewards of ownership

secured bonds

specified assets of the issuer pleged as collateral.

limited liability of stockholders

stockholders are liable for neither corporate acts nor corporate debt.

stock split

the distribution of additional shares to stockholders according to their percent ownership

bond indeture

the legal ontract between the issuer and the bondholders

authorized stock

the number of shares that a corporation charters allows it to sell

market rate

the rate that borrowers are willing to pay and lenders are willing to accept for a particular bond and its risk level

transferable ownership rights

the transfer of shares from one stockholder to another usually has no effect on the corporation or its operations

transferable ownership rights

the transfer of shares from one stockholder to another usually has no effect on the corporation or its operations except when this causes a change in the directors who control or manage the corporation

paid-in capital

total amount of cash and other assets the corporation receives from its stockholders in exchange for its stock