a) Proprietorship: An unincorporated business owned by a single individual.
Partnership: An unincorporated business owned by two or more individuals.
Corporation: A legal entity created by state law with multiple owners, all with limited liability.
b) Limited Partnership: A partnership where there are general and limited partners. The former are subjected to unlimited liability and control where as the latter are only liable for the amount of their investment in the business, and have no control.
Limited Liability Partnership: Also known as an LLC is where all partners are only liable for their investment in the business.
Professional Corporation: An incorporated business that offers limited liability to its multiple owners (shareholders) that invest in the business with minimal risk.
c) Stockholder wealth maximization: To increase the company’s ability to generate cash flow, which in turn leads to payouts to stockholders.
d) Money Market: The markets for short-term (less than one year to maturity) highly liquid debt securities.
Capital Market: The markets for intermediate or long-term (1- 5 years to
maturity) and corporate stocks.
Primary Market: The markets in which corporations raise new capital.
Secondary Market: The markets in which existing outstanding securities are traded among investors.
e) Private market: Markets where transactions occur directly between two parties.
Public Market: Markets where standardized contracts are traded on organized exchanges, such as a common stock or corporate bonds.
Derivatives: Financial instruments or securities that derive their value from another security.
f) Investment Banker: A facilitator to help transfer capital from savers to businesses by buying stocks or bonds from corporations and selling them to savers in the form of securities.
Financial Service Corporation: Conglomerates that include several financial institutions under one corporation.
Financial Intermediary: A bank or a mutual fund that takes cash from savers in exchange for its own securities and reinvests the cash in businesses securities.
g) Mutual Fund: Corporations that accept money from savers and use the money to invest in different securities, and pooling funds helps reduce risk to investors.
Money market Fund: Interest bearing checking accounts.
h) Physical Location Exchanges: Types of secondary markets where traders physically meet and trade in a specific location. Examples include NYSE and AMEX.
Computer/ Telephone Network: Types of secondary markets where traders make exchanges over computer or telephone networks and do not meet in person. An example of a computer or telephone networks is Nasdaq.
i) Open Outcry Auctions: An auction where traders meet in person and communicate via shouts and signals to trade.
Dealer Market: A market where dealers keep inventory of traded stocks and list the prices that they are willing to buy and sell at on a computerized quotation system.
Electronic Communications Network: An electronic system that matches market orders to buy and sell at the lowest prices. It then executes the transaction and notifies the parties involved.
j) Production Opportunities: The ability to turn capital into benefits. An example is when a student borrows to pay for college; they expect to get a better job and higher income from their investment.
Time Preference for Consumption: The choice of a buyer or business to save or spend their money in the present or to invest it and enjoy greater spending in the future.
k) Foreign Trade Deficit: When the government imports more than it exports or buys more than it sells on the international market, this debt is paid by borrowing, resulting in a deficit.