| A | B |
|---|
| equity capital | or owner capital, is business owners' personal contribution to the business |
| retained earnings | the profits that the owners do not take out of the business but instead save for use by the business |
| debt capital | or creditor capital, money that others loan to a business |
| common stock | stock that gives holders the right to participate in managing the business by voting on basic issues at the corporation's annual meeting and by electing the board of directors |
| par value | if new shares are issued, they assign this to call the value of each stock |
| market value | the price at which a stock is actually bought |
| preferred stock | stock that gives holders first claim on corporate dividends if a company earns a profit |
| cumulative preferred stock | if there isn't profit in a year, the guarantee remains in place for cumulative preferred stockholders |
| book value | share of stock calculated by dividing the corporation's net worth by the total number of shares outstanding |
| short-term debt | must be repaid, with interest, within a year, often within 30, 60, or 90 days |
| line of credit | the authorisation to borrow up to a maximum amount for a specified period of time |
| promissory note | an unconditional written promise to pay the lender a certain sum of money at a particular time or on demand |
| trade credit | obtained by buying goods and services that do not require immediate payment |
| long-term debt | capital borrowed for longer than a year |
| term loan | medium- or long-term financing used for operating funds or the purchase of improvement of fixed assets |
| long-term notes | written for periods of 1 to 15 years or longer |
| lease | a contract that allows the use of an asset for a fee paid on a schedule, such as monthly |
| bond | long-term debt instrument sold by the business to investors |
| principal | the money a bondholder receives from a business, it is the amount borrowed |
| debentures | unsecured bonds |
| mortgage bonds | bonds secured by specific long-term assets of the issuer |
| convertible bond | permits a bondholder to exchange bonds for a prescribed number of shares of common stock |
| investment bank | an organisation that helps a business raise large sums of capital through the sales of stocks and bonds |
| IPO | initial public offering, the first price the first time stock is offered to the public |
| stock option | a right granted by a corporation that allows current stockholders to buy additional shares when issued at a fixed price for a specific period of time |
| ESOP | employee stock ownership plan, employers sometimes offer employees stocks options |
| venture capital | financing obtained from an investor or investment group that lends large sums of money to promising new or expanding small companies |
| bull market | when investors are optimistic in the economy and BUY stock |
| bear market | when investors are pessimistic and sell shares of stock |
| securities | any investments that are bought and sold in the market |
| Portfolio | a collection of an investors securties |
| commission | the price paid to a broker for purchasing or selling securities for an investor |
| SEC securities & Exchange commission | the agency responsible for overseeing the buying ans selling of securities |
