Exam 1 Finance

Secondary market – -Most trading of stocks occur on this market
-investors trade among themselves through brokers
Net Cash Flow – Income-Expenses
Blue Chip Stocks – Well established, financially sound stocks that are publically traded on the open market
Interest income – Interest from banks, credit unions, and savings and loan associations
Timely – Which is NOT a characteristic of a good budget?
leverage ratios – Ratios that measure the extent to which a firm relies on debt financing in its capital structure
coupon payment – the specified number of dollars of interest paid each year
growth stock – issued by a corporation whose potential earnings may be higher than average, but no dividends
Fortune 500 – list of the top 500 US companies in terms of (both publicly and privately owned)
emergency fund – need to cover 3-6 months
________ cash flow is the increase in cash generated by a new project above the current cash flow without the new project.
Net Working Capital= – Current Assets – Current Liabilities
Summarize M&M Proposition I – A firm's value will change due to changes to cash flows. Cash flow values determine firm values. Therefore, the capital structure does not impact the firm's value.
Default (Credit) Risk – The risk that a bond issuer will default on its bonds
Truth in Lending – TIL,REG Z,Regulation Z, or the Consumer Credit Protection Act-a law passed to help consumers understand the true cost of borrowing money
________ cаsh flоw is the increаse in cаsh generated by a new prоject abоve the current cash flow without the new project.
Primary market – Raise new capital through issues shares
seasoned mortgage – a mortgage in existence for some time that has a good record of repayment by the mortgagor.
Price Earnings ratio – Price per share / Earnings per share
Free cash flow – Another name for cash flow from assets.

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