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corporate claims

firm value = liabilities + equity  claims on firm ( liabilities+ equity) : capital structure  financial claims  debt liabilities  equity  non financial claims  other liabilites  liabilities have higher priority over equity  debt is cheaper than equity  corporate claims  cash flow rights of claim owners  describes how firm-generated cash will be allocated to claims  liabilities have higher claim priority over equity  control rights of creditors  force the firm into bankruptcy if firm doesn't pay obligations  covenants ( positive or negative) control rights of stockholders  vote new board of directors to replace old board  board of directors appoints managment team  corporate claims  financial claims - debt  straight - pays interest regularly and principal at maturity  convertible - right to exchange bonds for a number of shares  covenant - conditions...
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midterm 1 notes

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Corporate Finance the law of one price - impact on local and global commerce theory versus reality -  consequences of wrong prices valuation practices ( highest and best use standard) DCF ( expected cash flows, discount rates) market comparisons( closeness of comparable, strength of attributes, etc.) asset or cost ( not visually applicable for most "going concern" entities goal of finance : valuation Valuation is forward looking ( perspective) Today's price is dependent on future cash flows into infinity historical performance guides our ability to predict future expectations finance studies the measurement of values limitation of finance useful only when elements are quantifiable in monetary terms inability to measure significant qualitative values ( e.g. internal, employee loyalty, etc.) Time Value of Money perfect market assumption no difference in opinion same relevant information is all know to market partici...
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chapter 5 homework

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