Textbook Notes (368,276)
Canada (161,758)
Economics (818)
ECON 2560 (71)
Chapter 1-3

Part 1 (Chapter 1-3)

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ECON 2560
Nancy Bower

Chapter 1 Goals and governance of the firm Capital budget decision or investment decisiondecisions about which real assets the firm should acquire Financing Decision on how to raise money to pay for investments in real assets Capital structure A firms mix of long term financingReal assets assets used to produce goods and services include tangible items such as machinery factories and offices and intangible assets such as tech knowledge trademarks and patentsFinancial assets claims to the income generate by real assets securititesshare of stock bank load Public companyCorporation whose share are listed on stock exchangePrivate company shares are privately ownedCorporation business owned but shareholders who are not personally liable for the businesss liabilities Sole proprietorship Sole owner of a business that has no partners and no shareholders Personally liable for all the firms obligations Partnership Business owned by two or more people who are personally responsible for all its liabilities Goal of the manager maximize companies firm value by increasing the companys shares value and the wealth of the shareholders Agency problemsconflict of interests between the firms owner and managers The goal of managers is t
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