ECON 2560 Chapter Notes - Chapter 1: Investment, Sole Proprietorship, Capital Structure
Document Summary
Corporation: business owned by shareholders who are not personally liable for the business"s. Limited liability: principle that the owners of the corporation are not personally responsible. Public company: corporation whose shares are listed for trading on a stock exchange. Private company: corporation whose shares ar eprivately owned. Sole proprietor: sole owner of a business that has no partners and no shareholders. The proprietor is personally liable for al the firm"s obligation. Partnership: business owned by two or more people who are personally responsible for all its. Capital budgeting decision or investment decision: decision as to which real assets the firm should acquire. Financing decision: decision as to how to raise the money to pay for investments in real assets. Capital structure: a firm"s mix of long-term financing. Real assets: assets used to prodice goods and services. Financial assets: claims to the income generated by real assets. Flow of cash between investors and the firm"s operations.
