FINE 2000 Chapter Notes - Chapter 1: Public Company, Double Taxation, Mci Inc.
Document Summary
Chapter 1: goals and governance of the firm. Investment (capital budgeting) decision: decision about which real assets the firm should acquire. The financing decision: decision on how to raise the money to pay for investments in real assets. Financial assets: claims to the income generated by real assets. Public company: corporation whose shares are listed for trading on a stock exchange. Flexibility when raising capital; need to provide investors with detailed financial info, disclosure; access to this info is crucial for those considering buying/selling shares. Private company: corporation whose shares are privately owned; to purchase shares you need to negotiate with the owners; info isn"t available publically. Corporation: separate legal entity; shareholders aren"t personally liable for the business" liabilities (limited liability) Board of directions: a group elected by shareholders and given the responsibility for overseeing the activities of the corporation, including the appointment of top managers and the monitoring of their performance. Separation of ownership and management permanence.