UGBA 10 - Module 1
Secured Loan (Asset-Backed Loan) - correct answer Loan to finance an asset, backed by the borrower
pledging the asset as collateral to the lender
Collateral - correct answer Asset pledged for the fulfillment of repaying a loan
Loan Principal - correct answer Amount of money that is loaned and must be repaid
Interest - correct answer Fee paid to a lender for the use of borrowed funds
Annual Percentage Rate (APR) - correct answer One-year rate that is charged for the borrowing,
expressed as a percentage of the borrowed principal
Working Capital - correct answer Current assets - Current liabilities
Unsecured Loan - correct answer Loan for which collateral is not required
Compensating Balance - correct answer Portion of loan amount on deposit with the bank, typically
required for unsecured loans
Business Plan - correct answer Document that tells potential lenders why money is needed, the amount,
how the money will be used to improve the company, and when it will be paid back
Angel Investors - correct answer Outside investors who provide new capital for firms in return for a share
of equity ownership
Venture Capital - correct answer Private funds from wealthy individuals seeking investment
opportunities in new growth companies
,Corporate Bond - correct answer Formal pledge obligating the issuer to pay interest periodically and
repay the principal at maturity
Bond Indenture - correct answer Legal document containing the complete details of a bond issue
Maturity Date (Due Date) - correct answer Future date when repayment of a bond is due from the bond
issuer (borrower)
Face Value (Par Value) - correct answer Amount of money that the bond buyer (lender) lent the issuer
and that the lender will receive on repayment
Short-term Bonds - correct answer Bonds that mature less than 5 years after they are issued
Intermediate-term Bonds - correct answer Bonds that mature between 5 and 10 years after they are
issued
Long-term Bonds - correct answer Bonds that mature more than 10 years after they are issued
Default - correct answer Failure of a borrower to make payment when due to a lender
Bondholders' Claim - correct answer Request for court enforcement of a bond's terms of payment
Bankruptcy - correct answer Court-granted permission for a company to not pay some or all debts
Mortgage-backed securities (MBS) - correct answer Mortgages pooled together to form a debt obligation
(bond) that entitles the holder (investor) to cash that flows in from the bundled mortgages
Initial Public Offerings (IPOs) - correct answer First sale of a company's stock to the general public
, Corporate Raider - correct answer Investor conducting a type of hostile corporate takeover against the
wishes of the company
Stock Split - correct answer Stock dividend paid in additional shares to shareholders, thus increasing the
number of outstanding shares and decreasing the share price
Earnings Per Share (EPS) - correct answer Net Income / Number of Shares
Price Earnings Ratio (PE Ratio) - correct answer Stock Price / EPS
Dividend Payment - correct answer Dividend Yield * Stock Price
Market Capitalization (Market Cap) - correct answer Total dollar value of all the company's outstanding
shares (Stock Price * Number of Shares)
Micro-Cap - correct answer Market Cap below $250M
Small-Cap - correct answer Market Cap between $250M and $2B
Mid-Cap - correct answer Market Cap between $2B and $10B
Large-Cap - correct answer Market Cap over $10B
Debt Financing - correct answer Long-term borrowing from sources outside a company
Equity Financing - correct answer Using the owners' funds from inside the company as the source for
long-term funding
Retained Earnings - correct answer Net profits retained for the firm's use rather than paid out in
dividends to stockholders
Secured Loan (Asset-Backed Loan) - correct answer Loan to finance an asset, backed by the borrower
pledging the asset as collateral to the lender
Collateral - correct answer Asset pledged for the fulfillment of repaying a loan
Loan Principal - correct answer Amount of money that is loaned and must be repaid
Interest - correct answer Fee paid to a lender for the use of borrowed funds
Annual Percentage Rate (APR) - correct answer One-year rate that is charged for the borrowing,
expressed as a percentage of the borrowed principal
Working Capital - correct answer Current assets - Current liabilities
Unsecured Loan - correct answer Loan for which collateral is not required
Compensating Balance - correct answer Portion of loan amount on deposit with the bank, typically
required for unsecured loans
Business Plan - correct answer Document that tells potential lenders why money is needed, the amount,
how the money will be used to improve the company, and when it will be paid back
Angel Investors - correct answer Outside investors who provide new capital for firms in return for a share
of equity ownership
Venture Capital - correct answer Private funds from wealthy individuals seeking investment
opportunities in new growth companies
,Corporate Bond - correct answer Formal pledge obligating the issuer to pay interest periodically and
repay the principal at maturity
Bond Indenture - correct answer Legal document containing the complete details of a bond issue
Maturity Date (Due Date) - correct answer Future date when repayment of a bond is due from the bond
issuer (borrower)
Face Value (Par Value) - correct answer Amount of money that the bond buyer (lender) lent the issuer
and that the lender will receive on repayment
Short-term Bonds - correct answer Bonds that mature less than 5 years after they are issued
Intermediate-term Bonds - correct answer Bonds that mature between 5 and 10 years after they are
issued
Long-term Bonds - correct answer Bonds that mature more than 10 years after they are issued
Default - correct answer Failure of a borrower to make payment when due to a lender
Bondholders' Claim - correct answer Request for court enforcement of a bond's terms of payment
Bankruptcy - correct answer Court-granted permission for a company to not pay some or all debts
Mortgage-backed securities (MBS) - correct answer Mortgages pooled together to form a debt obligation
(bond) that entitles the holder (investor) to cash that flows in from the bundled mortgages
Initial Public Offerings (IPOs) - correct answer First sale of a company's stock to the general public
, Corporate Raider - correct answer Investor conducting a type of hostile corporate takeover against the
wishes of the company
Stock Split - correct answer Stock dividend paid in additional shares to shareholders, thus increasing the
number of outstanding shares and decreasing the share price
Earnings Per Share (EPS) - correct answer Net Income / Number of Shares
Price Earnings Ratio (PE Ratio) - correct answer Stock Price / EPS
Dividend Payment - correct answer Dividend Yield * Stock Price
Market Capitalization (Market Cap) - correct answer Total dollar value of all the company's outstanding
shares (Stock Price * Number of Shares)
Micro-Cap - correct answer Market Cap below $250M
Small-Cap - correct answer Market Cap between $250M and $2B
Mid-Cap - correct answer Market Cap between $2B and $10B
Large-Cap - correct answer Market Cap over $10B
Debt Financing - correct answer Long-term borrowing from sources outside a company
Equity Financing - correct answer Using the owners' funds from inside the company as the source for
long-term funding
Retained Earnings - correct answer Net profits retained for the firm's use rather than paid out in
dividends to stockholders
