Finance Key Terms - Chapter 2 Open Stax

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Individuals or a firm that brings together potential buyers and sellers of a product and receives a commission at transaction.

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Brokers

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The study and application of how managers can apply financial principles to maximize the value of a firm in a risky environment.

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Business Finance

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The process of determining which long-term or fixed assets to acquire in an effort to maximize shareholder value.

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Capital Budgeting

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Market for longer-term financial instruments, such as stocks and bonds, used to finance long-term projects for organizations.

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Capital Market

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The mix of financing, usually debt and equity, used by a firm.

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Capital Structure

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An executive-level officer who sets policy for working capital management, determines optimal capital structure for the firm, and makes the final decision in matters of capital budgeting.

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Chief Financial Officer (CFO)

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Short-term, unsecured financial obligations issued by firms as a means of short-term financing for items such as inventory or payables.

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Commercial Paper (CP)

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Also referred to as controller, individual in charge of financial reporting and the oversight of the accounting activities necessary to develop financial reports.

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Comptroller

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Facilitate a market and the trading of securities by holding a portfolio of the underlying asset for easy purchase and sale; earn money on the spread between ask and bid prices for the asset.

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Dealers

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The risk that the issuer of a financial security will be unable to make payments as specified in the terms of a financial contract.

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Default Risk