12 Finance.pdf - Tuesday February 5 2019 12 Finance Themes...

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Tuesday, February 5, 2019 12 Finance Themes of the Course - Own certain stocks that are low-risk and pay dividends are 2 of the main pillars of Building Wealth - Understanding the different types of Investment Risks and how to minimize your risk - Receiving Dividends — can make a substantial difference in your total return over the years Day 1 - Introduction to Capital Markets and the Corporation What are the Capital Markets? - A market that channels savings and investments between suppliers of capital (retail and institutional investors) and users of capital (businesses and government) - Generates economic output, vital to economy - Market for stocks (equity) and bonds (debts) allow companies and government to raise money for operations, gives investors a return - TMX Group Ltd. (X.TO) - Exchange-traded - Owns TSX - Canada’s senior equity market, open 9:30 to 4, Monday to Friday - TSX Venture Exchange - a venture capital marketplace, small and emerging companies can raise cash. Based in Calgary The Corporation - Public Corporation - shares can be purchased by the general public in an organized securities market like the TSX. Shareholders are owners of the corporation. - Private Corporation - ‘closely-held corporations’ , shares held by a few shareholders, not available for the general public. - Corporate Structure - Shareholders elect the Board of Directors - Board of Directors elect the President - President hires the Vice President (sales, production, and finance) - VP sales oversees Domestic and International - VP production oversees Quality Control and Research + Development - VP finance oversees Payroll - Advantages - Limited Liability - owners can lose money invested, not responsible for debts of company - Specialized Management - operations, marketing, account - Transferrable Ownership - buy or sell shares - Continuous Existence - Separate Legal Entity - a corporation is a “person”. Can enter contracts, own land, borrow money, sue and be sued, must pay taxes and obey the law. - Easier to raise capital compared to proprietorships 1
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Tuesday, February 5, 2019 - Disadvantages - Lots of record-keeping - Conflict between shareholders and those managing company’s operations - Double Taxation of dividends - corporation is taxed, but shareholders must also pay tax on dividends received - Closely government-regulated - increased cost and complexity for compliance with provincial/state, national, and foreign laws - Full Disclosure - transparency, “publicly accountable enterprise” - Forming a Corporation - Organizations must choose to incorporate either federally or provincially. “Articles of Incorporation” must be submitted for approval. - Federal - Canada Business Corporations Act (if business is done in several states) - Provincial (Ontario) - Business Corporations Act - Articles form the “Constitution” for the company and include name and purpose of the corporation, number and kind of shares authorized, and location of the corporation’s head office.
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  • Spring '12
  • Vallier

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