TOMA-ULL-MGMT 425-EXAM 3

Capital Market - Answer- System that allocates Financial Resources in the form of debt and Equity Debt and equity - Answer- Two primary ways that companies obtain external financing Debt - Answer- What is a loan in which the borrower promises to repay the borrowed amount plus if we determine rate of interest. The Borrowed amount is called principal. Bonds - Answer- Company debt that normally takes the form of what Bond - Answer- Debt instrument that specifies the timing of principal and interest payments. The lender - Answer- Who is the holder of a bond that can force the borrower into bankruptcy if they fail to pay on a timely basis. Equity - Answer- Part ownership of a company in which the equity holder participates with other part owners in the company's Financial gains and losses Stock - Answer- Equity normally takes the form of what? Stock - Answer- Shares of ownership in a company's assets that give shareholders / stockholders a claim on the company's future cash flows. Dividends - Answer- What are increases in the value of a stockholder share or payments made out of surplus funds to shareholders. Financial performance - Answer- Dividend payments are not guaranteed and are determined by the company's board and based on what? Liquidity - Answer- Ease in which bondholders and shareholders may convert their investments into cash. Is a feature of both sent and equity markets. International Capital Market - Answer- A network of individuals, companies, financial institutions, and governments that invest and borrow across National boundaries. International Capital Market - formal Exchange - Answer- The market in which buyers and sellers meet to trade financial instruments