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30 Cards in this Set
- Front
- Back
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The mangaing of short-term assets and liabilites
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Working capital management
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Cash kept on hand by a firm to pay normal day expenses, such as employee wages and bills for supplies and utilities
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Transaction balances
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An address, usually a commercial bank, at which a company receives payments in order to speed collections from customers
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Lockbox
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Temporary investment of "extra" cash by organizations for up to one year in U.S. Treasury bills, CDS, commerical paper, or Eurodollar loans
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Marketable securities
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Short-term debt obligations the U.S. government sells to raise money
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Treasury bills
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Certificates of deposit issued by commercial banks and brokerage companies, available in minimum amounts of $100,000, which can be traded before maturity
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Commercial CDS
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Written promise from one company to another to pay a specific amount of money
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Commercial paper
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A market for trading U.S. dollars in foreign countries
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Eurodollar market
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Credit extended by suppliers for the purchase of their goods and services
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Trade credit
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An arrangement by which a bank agrees to lend a specific amount of money to an organization upon request
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Line of credit
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Loans backed by collateral that the bank can claim if the borrowers do not repay them
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Secured loans
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Loans backed only by the borrower's good reputation and previous credit rating
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Unsecured loans
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The interest rate that commercial banks charge their best customers (usually large corporations) for short-term loans
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Prime Rate
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A finance company to which businesses sell their accounts receivable--usually for a percentage of the total face value
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Factor
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Production facilities (plants), offices, and equipment--all of which are expected to last for many years
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Long-term (fixed) assets
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The process of analyzing the needs of the businesse and selecting the assets that will maximize its value
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Capital budgeting
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Debts that will be repaid over a number of years, such as long-term loans and bond issues
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Long-term liabilities
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Debt instruments that larger companies sell to raise long-term funds
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Bonds
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Debentures, or bonds that are not backed by specific collateral
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Unsecured bonds
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Bonds that are backed by specific collateral that must be forfeited if the issuing firm defaults
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Secured bonds
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A sequence of small bond issues of progressively longer maturity
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Serial bonds
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Bonds with interest rates that change with current interest rates otherwise available in the economy
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Floating-rate bonds
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A special type of high-interest rate bond that carries higher inherent risks
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Junk bonds
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Earnings after expenses and taxes that are reinvested in the assets of the firm and belong to the owners in the form of equity
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Retained earnings
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The dividend per share divided by the stock price
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Dividend yield
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The market where firms raise financial capital
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Primary market
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Stock exchanges and over-the-counter markets where investors can trade their securities with others
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Secondary market
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The sale of stocks and bonds for corporations
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Investment banking
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The mechanism for buying and selling securities
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Securities markets
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A network of dealers all over the country linked by computers, telephones, and teletype machines
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Over-the-counter (OTC) market
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