Sources of Funding and Central Banks

Flashcards covering key concepts related to funding sources, central banks, business structures, and expansion strategies.

External Funding

Funding needed by corporations to expand their business and invest in various areas.

Retained Earnings

Profits not distributed as dividends and reinvested in the company.

Share Buybacks

When a company repurchases its own shares from the stock market.

Debt Issue

A way for companies to raise funds by borrowing from investors, who become creditors.

Interest

The cost of borrowing money, which must be repaid along with the principal.

Equity Capital

Funds raised by a company in exchange for shares, which do not require interest payments.

Ownership Control

The rights and powers associated with owning a share in a company.

Lender of Last Resort

A function of central banks to provide liquidity to banks in crisis.

Systemic Crisis

A situation in which multiple banks are in trouble, potentially affecting the entire financial system.

Monetary Policy

Actions taken by a central bank to manage the economy by controlling the money supply and interest rates.

Exchange Rate

The value of one currency in terms of another.

Public Sector

Part of the economy that is controlled by government entities, providing services for the public benefit.

Private Sector

Part of the economy owned by private individuals or companies, focused on profit.

Non-profit Organizations

Organizations that aim to provide services and address needs without profit motive.

Limited Liability

Legal structure where owners are only liable for the amount they invested in the company.

Unlimited Liability

Legal structure where owners are personally liable for all debts of the business.

Internal Expansion

Growth strategies that involve increasing production or service capacity from within the business.

External Expansion

Growth strategies that involve mergers and acquisitions with other companies.

Horizontal Integration

When two companies in the same industry join together at the same stage of production.

Vertical Integration

When companies from the same industry but at different production stages merge.

Conglomerate Integration

When companies from different industries join together.

Sole Trader

An individual who runs and owns a business alone.

Partnership

A business structure where two or more individuals share ownership and decision-making.

Deed of Partnership

A legal document outlining the terms and conditions of a partnership.

Incorporated

A business structure with limited liability and a separate legal identity.

Unincorporated

A business structure with unlimited liability, where personal and business are not legally separate.