CP

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An Overview of Corporate Finance and the Financial Environment 3 1 In a beauty contest for companies, the winner is... General E ...

4 CHAPTER 1 An Overview of Corporate Finance and the Financial Environment This chapter should give you an idea of what corporat ...

How Are Companies Organized? 5 Just as a stool needs all three legs to stand, a successful company must have all three attribute ...

The proprietorship has three important advantages: (1) It is easily and inexpen- sively formed, (2) it is subject to few governm ...

liable for the debts of a partnership, you could be assessed for a share of the company’s debt, and you could be held liable for ...

than in the best interests of the owners? This is called an agency problem, because managers are hired as agents to act on behal ...

The Primary Objective of the Corporation Shareholders are the owners of a corporation, and they purchase stocks because they wan ...

3.Employees benefit.There are cases in which a stock increases when a company announces a plan to lay off employees, but viewed ...

higher profit by spending moreon labor and materials. For example, choosing the lowest-cost supplier might result in using poor ...

long-run strategic policy decisions that chart a future course for the firm. These policy decisions, along with the general leve ...

are not direct claims on either real assets or their cash flows. Instead, derivatives are claims whose values depend on what hap ...

more tailor-made but less liquid, whereas public market securities are more liquid but subject to greater standardization. Other ...

Derivatives can be used either to reduce risks or to speculate. As an example of a risk- reducing usage, suppose an importer’s n ...

Gamble lost $150 million on derivative investments, and Orange County (California) went bankrupt as a result of its treasurer’s ...

securities for a period of time, so it is taking a risk—it may not be able to resell them to savers for as much as it paid. Beca ...

18 CHAPTER 1 An Overview of Corporate Finance and the Financial Environment processing and collecting loans, and in pooling risk ...

3.Mutual savings banks,which are similar to S&Ls, operate primarily in the north- eastern states, accept savings primarily f ...

ranging from “guaranteed investment contracts” to government bond funds to do- mestic corporate bond and stock funds to internat ...

efficiency of our capital markets. Recognizing this fact, Congress has authorized some major changes, and more are on the horizo ...