Chapter 18

Chapter 18 - Manter 1 Chapter 18 Chapter 18 Financing and...

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Manter 1 Chapter 18 Chapter 18 – Financing and Investing through Securities Markets Security – stock, bond, or money market instrument that represents an obligation on the part of the issuer. Primary Market – market where new security issues are fist sold to investors; the issuer receives the proceeds from the sale. Initial Public Offering (IPO) – first sale of a firm’s stock to the investing public. Tombstone – announcements of new stock and bond offerings appear daily in business publications, simple black-and-white ad. Investment Banker – financial intermediary that purchases an issue or securities from the firm or government and then resells the issue to investors. Underwriting – process used by insurance companies to determine whom to insure and what to charge; in finance, process of purchasing a stock or bond issue from a firm or government and then reselling it to investors. Secondary Market – financial markets where previously issues securities are traded among investors. Money Market Instruments – short-term debt securities issued by corporations, financial institutions such as banks, and governments. Secured Bond – bond backed by specific pledge of a company’s assets. Debentures – bond backed by the reputation of the issuer rather than by a specific pledge of a company’s assets. Government Bond – debt obligations issued by the U.S. Treasury; they are backed by the full faith and credit for the U.S. government. Municipal Bond – credit instrument issued by state or local governments; they can be either revenue bonds or general obligation bonds. Bond Rating – tool used by bond investors to assess the riskiness of bond. Call Provision – ability of an issuer to redeem a bond prior to its maturity at a prespecified price. Common Stock – share of ownership in a company. Preferred Stock – stock whose holders receive preference in the payment of dividends.
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Manter 2 Chapter 18 Convertible Securities – the bondholder or preferred stockholder has the right to exchange the bond or preferred stock for a fixed number of shares of common stock. Investment Motivations
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Chapter 18 - Manter 1 Chapter 18 Chapter 18 Financing and...

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