| A | B |
|---|
| capital | refers to money required to start or expand a business |
| equity capital | owner capital; business owners contributions to the business |
| retained earnings | the profits that are not taken out the business but instead are saved for future use by the business |
| debt capital | creditor capital; money that others loan to a business |
| common stock | ownership that gives holders the right to participate in managing the business through voting privileges plus the right to share in any profits through dividends |
| par value | the value that the board of directors assign to shares when they decide on the number of shares of common stock will be issued by the corporation |
| market value | the price at which stock is actually bought and sold |
| preferred stock | stock that gives holders first claim on corporate dividends if a company earns a profit |
| book value | calculated by dividing the corporations net worth (assets minus liabilities) by the total number of shares outstanding |
| short term debt | a loan that must be repaid within a year |
| line of credit | the authorization to borrow up to a maximum amount for a specified period of time |
| promissory note | an unconditioned writtten promise to pay to the lender a certain sum of money at a particular time, or on demand if certain adverse conditions arise |
| security | something of value pledged as assurance of the fulfillment of an obligation |
| trade credit | obtained when a business buys goods and servicesthat do not require immediate payment |
| factor | a firm that specializes in lending money to businesses based on the businesses accounts receivable |
| sales finance company | provides capital to business based on debts owed by customers |
| long term debt | capital borrowed for longer than a year |
| term loan | medium or long term financing used for operating funds or the purchase or improvement of fixed assets |
| lease | a contract that allows the use of an asset for a fee paid on schedule, such as monthly |
| bond | a long term debt instrument sold by the business to investors |
| debentures | unsecured binds |
| mortgage bond | secured by specific long term assets of the insurer |
| convertible bond | permits the bond holder to exchange bonds for a predetermined number of shares of common stock at a later time |
| investment bank | an organization that helps a business raise large sums of capital through the sales of stocks and bonds |
| initial public offering ( IPO) | the first time that a company sells stockto the public |
| STOCK OPTION | a right granted by a corporation that allows current stockholders to buy additional shares when issued at afixed price for a specific period of time |
| employee stock ownership plan (ESOP) | a plan that allows employees to become owners of the company they work for through the incremental purchase of stock |
| venture capital | financing obtained from an investor or investment group that provides large sums of money to promising new or expanding small companies |
