Flashcards in Chapter 14 Quiz Deck (10)
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1
The proportional breakdown of cash and securities.
Cash and securities mix decision
2
A policy that defines the company's posture toward risk and return and specifies how the policy should be implemented.
Investment policy
3
The possibility that the company will not be able to meet ongoing operating expenditures.
Business risk
4
The possibility that the company will be unable to cover financing-related expenditures such as lease payments, interest, principal repayment, and preferred stock dividends.
Financial risk
5
Risk that is relevant to diversified investors which is the degree of sensitivity of the company's stock returns to market-wide returns.
Systematic risk
6
The interest of the principals (stockholders) do not coincide with those of the agents (managers).
Agency problems
7
Specialized account in which financial institution hold securities, automatically reinvests interest and other investment-related cash receipts, transfers funds per corporate instructions, monitors issuers actions such as calls and refundings, and provides a monthly statement on all account transactions
Custody account
8
The investment manager must decide from among 6 options prior to investing.
1. Instruments
2. Issuers
3. Denominations
4. Maturities
5. Yields
6 Risks
9
A group of investment banks
Syndicate
10
