Chapter 1

Chapter 1 - Chapter 1 Real Assets Assets used to produce...

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Chapter 1 Real Assets: Assets used to produce goods and services: land, buildings, equipment and  knowledge. Financial Assets: Stocks and bonds, claims on real assets or income generated by them. Fixed Income/Debt Securities: Promise either a fixed stream of income or a stream of income  that is determined according to a specified formula. Equity: Ownership share in a corporation. Derivative Securities: Securities providing payoffs that depend on the values of other assets. Agency Problems: Conflicts of interest between managers and stockholders. Solutions to this problem are: Compensation plans tie the income of managers to the firm’s success Boards are more willing to push out managers Outsiders such as security analysts and institutional investors monitor the firm closely Bad performers are subject to the threat of takeover Shareholders can vote in a new board through proxy contest
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This note was uploaded on 10/28/2008 for the course FIN 312 taught by Professor Staff during the Spring '08 term at Bryant.

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Chapter 1 - Chapter 1 Real Assets Assets used to produce...

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