财务英语期末复习资料

第十五章

1、What is the financial deficit? 财政赤字是什么？

The gap between the cash that companies need and the cash that they generate internally is the financial deficit.

2、 To make up the deficit, companies need to raise money from the outside — borrow or sell new equity. what are the two patterns for corporations to raise money?企业筹集资金的两种模式是什么？

Firms may raise funds from external sources or plow back profits rather than distribute them to shareholders.

3、 Should a firm elect external financing, they may choose between debt or equity sources. define authorized share capital,issued and

outstanding ,issued but not outstanding,treasury shares.定义法定股本，发行及未偿还，已颁布但尚未行使，发行但偿还，库存股份。

authorized share capital：The maximum number of shares of capital stock that can be sold to the public.

Treasury shares ：are issued shares that have been reacquired by the corporation. Outstanding shares： are issued shares that are owned by stockholders.

Issued shares are authorized shares of stock that have been sold.

Unissued shares are authorized shares of stock that never have been sold.

4、what is the difference between Majority Voting and Cumulative Voting? Majority Voting– each director is voted upon separately and stockholders can cast one vote for each share that they own.

Cumulative Voting– the directors are voted upon jointly and stockholders can allot all their votes to just one candidate

Suppose that there are five directors to be elected and you can own 100 shares. You therefore have a total of 500 votes.

Under the majority voting system, you can cast a maximum of 100 votes for any one candidate.

Under the cumulative voting system, you can cast all 500 votes for your favorite candidate

5、Tunneling– the majority shareholders tunnels into the firm and acquire control of the assets for

Himself.

6、Proxy Contest – transference of corporate control

7、优先股的特点

Preferred Stock – Stock that takes priority over common stock in regards to dividends.

8、Cumulative Preferred Stock– the firm must pay all past preferred dividends before common stockholders get a cent. 累积优先股

9、“Default Risk” is the term used to describe the likelihood that a firm will walk away from its obligation, either voluntarily or involuntarily

10、税收优势的定义无 Interest is paid from before-tax income, whereas dividends

on common and preferred stock are paid from after-tax income. Therefore the government provides a tax subsidy on the use of debt that it does not provide on equity.

11、senior debt：P398高级

Junior（subordinated）debt：次级

12、collateral：抵押品P398

13、Warrant：the most dramatic example is provided by a warrant认股权证

14、convertible bond：可转换债券P399

15、What is primary market？secondary market？OTC？P400

16、What is the function of financial intermediary？金融中介的作用p400

第十六章

1、Venture Capital：创业资本P407

2、Some continue to grow with the aid of equity investment provided by wealthy individuals known as angel investors天使投资者

3、新公司筹资的最重要方式是：family funds and banks loans；angel investors；specialist venture-capital firms.

4、how could the Venture capitalists have opportunity of cash out？

Venture capitalists may cash in on their investment in two ways.

? First, once the new business has established a track record, it may be sold out to a larger firm.

? Second, the company may decide to go public and so provide the original backers with an opportunity to “cash out,” selling their stock and leaving the original entrepreneurs in control.

5、the two items of IPO:

Primary Offering: New shares are sold to raise additional cash for the company. Secondary Offering: The existing shareholders decide to cash in by selling part of their holdings

6、Bookbuilding：The underwriter builds a book of likely orders and uses this information to set the issue price.

7、IPO步骤：P423

8、Underwriter - Firm that buys an issue of securities from a company and resells it to the public.

Spread - Difference between public offer price and price paid by underwriter. Greenshoe option - Option that allow the underwriter for a new issue to buy and resell additional shares.

Prospectus - Formal summary that provides information on an issue of securities. Underpricing - Issuing securities at an offering price set below the true value of the security.

9、Types of Auction拍卖

?Discriminatory auction In a discriminatory auction every winner is required to pay the price that he or she bid.

?Uniform-price auction In a uniform-price auction both would pay the price of the lowest winning bidder

10、Rights Issue— Issue of securities offered only to current stockholders优先股发行 Also known as Privileged subscription

如何计算：

Example 1- BNP needs to raise €5.50 billion of new equity. The market price is €77.40/sh. BNP decides to raise additional funds via a 1 for 10 rights offer at €65.40 per share. If we assume 100% subscription, what is the value of each right?

Current Market Value = 10 x €77.40 = €774.00

Total Shares = 10 + 1 = 11

Amount of funds = 774 + 65.40 = €839.40

New Share Price = (839.40) / 11 = €76.31

Value of a Right = 76.31 – 65.40 = €0.91

Example2 - BNP needs to raise €1.28billion of new equity. The market price is €60/sh. BNP decides to raise additional funds via a 4 for 17 rights offer at €41 per share. If we assume 100% subscription, what is the value of each right? Current Market Value = 17 x €60 = €1,020

Total Shares = 17 + 4 = 21

Amount of funds = 1,020 + (4x41) = €1,184

New Share Price = (1,184) / 21 = €56.38

Value of a Right = 56.38 – 41 = €5.38

12、Private Placement ：Sale of securities to a limited number of investors without

a public offering私募

Disadvantage: A private placement is that the investors cannot easily resell the securities.

Advantage: It costs less to arrange a private placement than to make a public issue 第十六章

1、what are the two ways for corporations to return cash to their shareholders？ Dividend ；Stock Repurchase

2、Types of Dividends：

Cash Dividend

1. Regular Cash Dividend

2. Special Cash Dividend

Stock Dividend

Dividend Reinvestment Plan (DRIP)

3、how the dividends are paid？

Declaration date: This is the date on which the board of directors announces that the company will pay a dividend.

Cum-Dividend Date: Last day when shares are traded with the right to receive the dividend.

Ex-Dividend Date: First day when shares are traded without the right to receive the dividend. (a business day after the Cum-Dividend date). On or after this date the security trades without its dividend. The ex-date is the second business day before the date of record.

Date of record : Shareholders are recorded to receive dividends.

Payment date: Dividend checks mailed out.

4、what is stock repurchase？What are the four main ways？

Firms repurchase stock when they have accumulated a large amount of unwanted cash or wish to change their capital structure by replacing equity with debt.

. Buy shares on the market

. Tender Offer to Shareholders

. Dutch Auction

. Private Negotiation (Green Mail)

5、Stock split: Issue of additional shares to a firm’s shareholders.

Reverse split:A process by a company of issuing to each shareholder in that company a smaller number of new shares in proportion to that shareholder's original shares that are subsequently canceled

6、分清后三者特点：

7、分析Financial Influence对四者的影响：

8、what are the three groups on whether the payout policy change the value of the stock？

.Managers are reluctant to make dividend changes that might have to be reversed. They are particularly worried about having to rescind a dividend increase, and, if necessary, would choose to raise new funds to maintain the payout.

.To avoid the risk of a reduction in payout, managers “smooth” dividends. Consequently, dividend changes follow shift in long-run sustainable earnings. Transitory earnings changes are unlikely to affect dividend payouts.

. Managers focus more on dividend changes than on absolute levels.

9、what is MM theory？why MM claims that payout policy is irrelevant？Modigliani and Miller (MM) maintain that under ideal conditions, dividend policy is irrelevant.

? Assuming perfect capital markets with no taxes or costs of financial distress. ? Assuming efficient markets and fairly priced assets.

The Irrelevancy of Dividend Policy：Since investors do not need dividends to convert shares to cash they will not pay higher prices for firms with higher dividend payouts. In other words, dividend policy will have no impact on the value of the firm. 第十八章

1、The firm’s mix of debt and equity financing is called capital structure.

2、Financial leverage measured as the ratio of total debt to total assets; greater the amount of debt, greater the financial leverage.

3、What is the primary goal of financial managers？

The financial manager wants to choose the capital structure that will maximize stockholder wealth.

4、Is a policy that maximize the market value of the firm is also best for the firm’s stockholders？Why？

5、M&M Proposition I：

Firm value is determined on the left-hand side of the balance sheet by real assets, not by the proportions of debt and equity securities issued to buy the assets.

6、MM’s Proposition 2：

The expected rate of return on the common stock of a levered firm increases in proportion to the debt-equity ratio (D/E).

7、Are MM’s Proposition 1 and 2 conflicting?Why？

MM’s Proposition 1 and 2 are NOT conflicting.

Any increase in expected return is exactly offset by an increase in risk and therefore in shareholder’s required rate of return.