Business Law: Ch. 39- Corporate Formation-Financing

question

Ultra vires
answer

means “beyond the power,” refers to acts of a corporation that are beyond its express or implied powers.
question

Alien corporation
answer

A corporation formed in another country but doing business in the United States.
question

Articles of incorporation
answer

The primary document needed to incorporate a business; includes the name of the corporation, the name and address of each incorporator, etc.
question

Bond
answer

Represent the borrowing of funds by firms and governments.
question

Bond indenture
answer

A lending agreement that involves various features and terms of a particular bond issue that are specified.
question

Bylaws
answer

Internal rules of management adopted by the corporation at its first organizational meeting.
question

Closely held corporation
answer

Corporation whose shares are not publicly traded.
question

Commingle
answer

Personal and corporate interests that are mixed together.
question

Common stock
answer

The true ownership of a corporation; provides an interest in the corporation with regard to control, earnings, and net assets.
question

Dividends
answer

When a corporation earns profits, it can distribute them to its shareholders in this form.
question

Domestic corporation
answer

When a corporation is in the state in which it is incorporated.
question

Foreign corporation
answer

A corporation formed in one state but doing business in another.
question

Holding company
answer

A company whose business activity consists of holding shares in another company.
question

Pierce the corporate veil
answer

Refers to exposing the shareholders to personal liability if the situation arises to do so.
question

Preferred stock
answer

An equity security with preferences; holders of this stock have priority over holders of common stock.
question

Private equity capital
answer

Firms use this to invest in existing corporations; private equity firms obtain their capital from wealthy investors in private markets.
question

Public corporation
answer

A corporation formed by the government to meet some political or governmental purpose.
question

Publicly held corporation
answer

A corporation whose shares are publicly traded in a securities market.
question

Retained earnings
answer

When a corporation retains profits; they will essentially cause the price of the company’s stock to rise.
question

S corporation
answer

A closely held corporation that is taxed like a partnership; it avoids the double taxation imposed on regular corporations.
question

Securities
answer

Corporations are financed by the issuance and sale of securities, which include stocks and bonds.
question

Stock
answer

Represent the purchase of ownership in the business firm.
question

Venture capital
answer

Is capital provided to new business ventures by professional, outside investors.

Get instant access to
all materials

Become a Member