MGF 301 Chapter Notes - Chapter 1: Legal Personality, Limited Partnership, Professional Corporation

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Chapter 1 goals and governance of the corporation. = capital expenditure (capex) decision: decision to invest in tangible or intangible assets. Investors receive shares of stock and become share-holders, part-owners of the corporation; investors are equity investors, who contribute equity financing. The form and amount of financing of a firm"s investments. Investors are lenders, debt investors, who one day must be paid, debt financing. Capital = the firm"s sources of long-term financing. A firm that is seeking to raise long-term financing is said to be (cid:532)raising capital(cid:533) Invest: acquire real assets (assets used to produce goods and services) Finance: finance its investment in real assets by issuing financial assets (financial claims to the income generated by the firm"s real assets) to investors. Securities: shares of stock and other financial assets that can be purchased and traded by investors. A business organized as a separate legal entity owned (legally distinct from) by stockholders.

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