Student Study Guide Chapter 8 Financing a Business Name: Date : UNDERSTANDING VOCABULARY Microductor, Inc., the new computer chip manufacturer, is making waves in the world of microprocessors. Its new Octavium Processor is eight times faster than the industry leader. To get the money to pay researchers and ' buy the equipment it needs for the Octavium chip, Microductor is using several strategies. First of all, Microductor sold 9 10 bonds in the financial markets. Bonds are a As a result, Microductor will pay 12 to the bondholders each year until the principal is due in 15 years. Bonds are an example of term loans. Because Microductor is a young, growing company, it often needs extra cash to meet its payroll or to buy basic supplies. The best sources of money for these short-term needs are 13 Businesses like Microductor also get new capital by selling stock. This is called 14 because a share of stock is a share in the ownership of a company. Microductor issued and sold one million new shares of common stock. Many of the new stockholders hope that Microductor will earn a profit and pay 15 However, some stockholders hope that Microductor will be successful so they can sell their stock for more than they paid originally. As a business grows, the value of its stock tends to 16 . Microductor is traded on NASDAQ. This is an example of a 17 . NASDAQ, the New York Stock Exchange, and other organized exchanges are regulated by the _ 18 .However, even if the value of Microductor's shares falls, some stock traders, nicknamed 19 can make a profit. Investors in Microductor are likely to study its two main financial statements. the balance sheet and the income statement. The balance sheet is like - snapshot of a business showing 20 -. The difference between these is the 21 . Cash on hand, inventories, and plant and equipment are examples of 22 Accounts payable and long-term debt are examples of 23 . The income statement is like a movie. It shows _24