Fundamentals of Corporate Finance Chapter 14 Introduction to Corporate Financing

1) Companies use what to forms to raise funds? Provide examples of each.

2) On average which do companies use more debt (loans) or equity (sell common stock)?.

3) What is another source of funding besides debt or equity?.

4) What are example of companies that had high debt ratios and fell into financial distress?

5) What is common stock? Define the associated accounts (Treasury stock, Issued shares, etc).

6) Charles Products has one stock issue in which it sold 10,000 shares to the public at $20 per share. Fill in the following table Common shares ($1 par value per share) _____________ Additional paid-in capital ___________ Retained earnings _____________ Net common equity $450,000.

7). What are stockholders entitled to, have control over and have approval on?

8) Describe the voting procedures. Include information on "super majority" and proxy voting.

9) What are the different classes of stock? How many classes do most companies have?

10). what is preferred stock? What is its characteristics?

11) Debt comes in many forms. Name and describe some of them.

12). Define prime rate.

13). what is a protective covenant?

14) Why is bundling and selling loans important?.

15) Name and describe two types of convertible securities.