| A | B |
|---|
| equity capital (owner capital) | money invested in the business by its owner or owners |
| retained earnings | profits that are put aside to run a business |
| debt capital (creditor capital) | capital loaned to a business by others |
| stock | a share of ownership in a corporation |
| securities | stocks and bonds |
| common stock | ownership that gives holders the right to participate in managing the business by having voting privileges and by sharing in the profits (dividends) if there are any |
| preferred stock | ownership that gives holders preference over the common stockholders when distributing dividends or assets |
| market value | the value at which stock is bought and sold on any given day |
| par value (stated value) | a dollar value shown on a share of stock, which is an arbitrarily assigned amount that is used for bookkeeping purposes |
| book value | the value of a share of stock that is found by dividing the net worth (assets minus liabilties) of the corporation by the total number of shares outstanding |
| short-term capital | borrowed capital that must be repaid within a year, and often in 30, 60, or 90 days |
| open line of credit | authorization to borrow up to a specified amount for a specified period of time |
| promissory note | an unconditional written promise to pay a certain sum of money, at a particular time or on demand, to the order of one who has obtained the note |
| factor | a firm that specializes in lending money to businesses based on the business's accounts receivable |
| sales finance company | specializes in purchasing installment sales contracts at a discount from businesses that need cash or that do not care to handle collections |
| long-term capital | capital that is borrowed for longer than a year |
| long-term notes (term loans) | loans written for periods of 1 to 15 years |
| lease | a contract that allows the use of an asset for a fee |
| bond | a long-term written promise to pay a definite sum of money at a specified time |
| debentures | bonds that are not secured by assets but based upon the faith and credit of the corporation that issues them |
| mortgage bond | bond on which specific assets are pledged as a guarantee that the principal and interest will be paid according to the terms specified on the bonds |
| convertible bond | bond that allows bondholders to exchange bonds for a prescribed number of shares of common stock |
| investment bank | an organization that helps businesses raise capital through the sales of stocks and bonds |
| initial public offering (IPO) | the first time that a company sells stock to the public |
| stock rights option | a contract that allows stockholders to buy additional shares for less than the market price for a specified period of time |
| venture capitalist | an investor or investment group that lends large sums of money to promising new or expanding small companies |
