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The typical capital budgeting project involves a large up-front cash outlay, followed by
a series of smaller net cash outflows.
Cross-sectional analysis is used to evaluate a firm's performance over time.
The weighted average cost of capital represents the maximum required rate of return on
a capital-budgeting project and is found by multiplying the cost of each capital structure
component by its appropriate weight and summing the terms.
The par value of a common stock is an accounting and legal concept that bears no
relationship to a firm's stock price or book value.
International banking exists when banks operate in more than one country.
A mortgage-backed security is an investment created by using a house as collateral for a
loan.
Automatic stabilizers include trade deficits, budget deficits, and floating exchange rates.
A nation with relatively lower interest rate levels than other countries will have a
relatively stronger currency.
EBIT/EPS analysis allows managers to see how different capital structures affect the
earnings levels of their firms.
Preferred stock is an equity security that has a senior claim to the firm's earnings and
assets over bonds.
