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Test Bank for Vocab- Chapters 1-6; Fundamentals of Corporate Finance 6th edition by Jonathan Berk
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Test Bank for Vocab- Chapters 1-6; Fundamentals of Corporate Finance 6th edition by Jonathan Berk
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Vocab- Chapters 1-6; Fundamentals ofCorporate Finance
Capital Budgeting: _______
Ch. 1 - ANS_____: The process of planning and managing a firms long-term investments
Capital Structure: _______
Ch 1 - ANS_____: The mixture of debt and equity maintained by a firm
Working Capital: _______
Ch 1 - ANS_____: A firm's short term assets and liabilities
Partnership: _______
Ch 1 - ANS_____: A business formed by two or more individuals or entities
Sole Proprietorship: _______
Ch 1 - ANS_____: A business owned by a single individual
Corporation: _______
These are also called: ____, ____, ____
Ch 1 - ANS_____: A business created as a distinct legal entity composed of one or more
individuals or entities
These are also called joint stock companies, public limited companies, or limited liability
companies.
Sarbanes-Oxley: _______. Passed in ____.
Ch 1 - ANS_____: Intended to protect investors from corporate abuses. Passed in 2002.
Agency Problem: _______
Ch 1 - ANS_____: The possibility of conflict of interest between the stockholders and
management of a firm
, Stakeholder: _______
Ch 1 - ANS_____: Someone other than a stockholder or creditor who potentially has a claim on
the cash flows of a firm.
Primary Market: _______. 2 types: _____.
Ch 1 - ANS_____: The corporation is the seller, and the transaction raises money for the
corporation. 2 types: Public and Private.
Secondary Market: _______
Ch 1 - ANS_____: Involves one owner or creditor selling to another.
Balance Sheet: _______. ____ on the left side, ____ on the right.
Ch 2 - ANS_____: Financial statement showing the firm's accounting value on a particular date.
Assets on the left side, Liabilities and Owner's Equity on the right.
Net Working Capital: _______
Ch 2 - ANS_____: Current assets - current liabilities
Income Statement: _______
Ch 2 - ANS_____: Financial statement summarizing a firm's performance over a period of time
Noncash Items: _______
Ch 2 - ANS_____: Expenses charged against revenues that do not directly affect cash flow
(such as depreciation)
Average Tax Rate: _______
Ch 2 - ANS_____: Total taxes paid / total taxable income
Marginal Tax Rate: _______
Ch 2 - ANS_____: Amount of tax payable on the next dollar earned
Cash Flow From Assets: _______. Consists of : ___, ___, & ___.
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