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Definition of goal congruence
a circumstance in which the personal and
a desired abstract achievement
A bond covenant that specifies certain actions the firm must take.
The decision regarding how an institution's funds should be distributed among the
decision as to which real assets the firm should acquire.
he written statement that follows any "trade" in the securities markets. Confirmation is issued
the process of choosing among the alternative
Method of representing alternative sequential decisions and the possible outcomes from these decisions.
Diagram of sequential decisions and possible outcomes.
an unknown item for which a linear programming
a judgment made regarding the method
decision as to how to raise the money to pay for investments in real assets.
decisions concerning the liabilities and stockholders' equity side of the firm's balance
Refers to an order to buy or sell that can be executed without confirmation for some fixed period. Also,
An undewriting in which an investment banking firm commits to buy the
Total firm value minus total firm debt.
See:diversifiable risk or unsystematic risk.
Intrinsic value of a firm
The present value of a firm's expected future net cash flows discounted by the
a judgment about which assets will be
decisions concerning the asset side of a firm's balance sheet, such as the decision to
a decision that compares the cost of
decisions concerning the operation of the firm, such as the choice of firm size, firm
Mutually exclusive investment decisions
Investment decisions in which the acceptance of a project
mutually exclusive projects
a set of proposed capital projects from which one is chosen, causing all the others to be rejected
mutually exclusive projects
Two or more projects that cannot be pursued simultaneously.
mutually inclusive projects
a set of proposed capital projects that are all related and that must all be chosen if the primary project is chosen
Neglected firm effect
The tendency of firms that are neglected by security analysts to outperform firms that
the set of basic assumptions about
an entity’s legal nature (for example,
a cost incurred to support the ongoing
the manner in which authority and
see make-or-buy decision
Assets, the title of which are held personally rather than in the name of some other legal entity.
A legal document whereby an individual takes responsibility for payment of debt or performance of some obligation if the person/company primarily liable fails to perform.
Personal Line of credit (Credit Insurance)
A bank's commitment to make loans to a borrower up to a specified maximum during a specific period, usually one year.
personal line of credit (PLC)
A revolving source of credit with a pre-established limit. You access the funds only as you need them, and any amount that you pay back becomes accessible to you again. Unlike a personal loan, a PLC permits you to write cheques and make bank machine withdrawals, and requires you to pay interest only on the funds that you actually use.
A lump sum that you borrow from a financial institution for a specified period of time. To repay the loan, you pay interest on the entire lump sum, and make payments on a scheduled basis.
Personal Overdraft Facility
A loan facility on a customers account at a financial institution allowing the customer to overdraw up to a certain agreed limit for an agreed period.
Personal Responsibility and Work Opportunity Reconciliation Act
A federal Act requiring the reporting of new hires into a national database.
Personal tax view (of capital structure)
The argument that the difference in personal tax rates between
An interest in an asset held by a trustee for the benefit of another person.
PIN (personal identification number)
A secret code that you use to access your bank account at a bank machine or at a point of sale (POS) terminal. You may also have a PIN for banking by telephone.
the second decision made in capital project evaluation in which projects are ranked according to their impact on the achievement of company objectives
the first decision made in evaluating capital
Security selection decision
Choosing the particular securities to include in a portfolio.
The tendency of small firms (in terms of total market capitalization) to outperform the
special order decision
a situation in which management must determine a sales price to charge for manufacturing or service jobs outside the company’s normal production/service market
A firm that is the object of a takeover by another firm.
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