Lecture 6 Business Enterprise Int. Business

Lecture 6 Business Enterprise Int. Business - The...

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Unformatted text preview: The Business Entity: Legal forms of Business Organization One brief note • We’ve found a student who has been going to the wrong lab for the entire term • Do not do this • Make sure you are where you are supposed to be on Mondays Before we begin: BONDS • Written promise that the borrower will pay the lender, at a future date, a sum of money (the principal) and a stated rate of interest. • Secured Bonds: tied to a specific asset. • Debentures: (unsecured bond) No specific asset pledged. • Secured bonds have precedence in the even of liquidation. • Registered vs. Bearer • Example of a bond: An investor purchases a $10,000 (the principal) bond from BCE Inc. In return, BCE agrees to pay the bondholder $700 (7%) per annum for 10 years, and when the bond matures will pay back the principal. BONDS Cont. • Retirement: – Most bonds are callable and have a call price. – Some have sinking funds – dedicated fund to repayment of principal – Serial Bonds retire according to a schedule. – Convertible Bonds can be paid off in common stock at the option of the bondholder. • Secondary Bond Markets – Bonds are traded in the OTC market. – Bonds fluctuate in market value: as interest rates increase existing bond prices tend to decline. As interest rates decrease existing bond prices tend to rise. – Bond Yield is comprised of gains/losses from price changes and the stated interest rate (p. 422) A quick exercise In groups of 5-6 people: You have either $1 million dollars (right hand side), $100,000 (middle) or $10,000 (left hand side). Develop at least one idea for a business venture – be as specific as possible in the time allowed. Be prepared to answer: Why did you choose that idea? Besides money, what other constraints impact your decisions? Do you think it could be successful? Establishments by industry 2000 1 Employment size Total 0-4 2 employees 5-49 employees 50-99 employees 100 employees and more number of establishments All industries 2,024,508 1,586,749 383,062 31,081 23,616 * Statistics Canada Entrepreneurship • Entrepreneur – A business person who accepts both the risks and the opportunities involved in creating and operating a new business venture • Embraces the challenge of business ownership • Accepts risks to pursue opportunities • Those who are not “truly” entrepreneurial are content to stay small and manage their existing business Entrepreneurial Characteristics • Drive to achieve business success...
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This note was uploaded on 01/14/2011 for the course MGMT 2384 taught by Professor Mclaren during the Spring '08 term at Saint Mary's University Texas.

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Lecture 6 Business Enterprise Int. Business - The...

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