FIN 300 Chapter 1- Introduction to Corporate Finance

Stakeholder

Anyone who potentially has a claim on a firm.

Corporation

A business created as a distinct legal entity owned by one or more individuals or entities.

Partnership

A business formed by two or more co-owners.

Sole proprietorship

A business owned by a single individual.

Financial engineering

Creation of new securities or financial processes.

Capital markets

Financial markets where long-term debt and equity securities are bought and sold.

Money markets

Financial markets where short-term debt securities are bought and sold.

Derivative securities

Options, futures, and other securities whose value derives from the price of another, underlying, asset..

Working capital management

Planning and managing the firm's current assets and liabilities.

Corporate governance

Rules of corporate organization and conduct.

Capital structure

The mix of debt and equity maintained by a firm.

Agency problem

The possibility of conflicts of interest between the shareholders and management of a firm.

Regulatory dialectic

The pressures financial institutions and regulatory bodies exert on each other.

Capital budgeting

The process of planning and managing a firm's investment in long-term assets.