Financial Management Chapt 1

What are the financial functions in the financial system?

1. Creating money 2. Transferring money 3. Accumulating savings 4. Lending and investing 5. Marketing financial assets 6. Transferring financial assets

Three areas of finance within the financial environment

1. Institutions and markets 2. Investments 3. Financial management All related and interchangeable

Financial System

A complet mix of financial intermediaries, markets, instruments, policy makers, and regulations that interact to expedite the flow of financial capital from savings into investments

Foreign Exchange Markets

Electronic markets in which banks and institutional traders buy and sell various currencies on behalf of businesses and other clients

Financial Environment

Encompasses the financial system/institutions/intermediaries/financial markets/ business firms/individuals/ global interactions that contribute to an efficiently operating economy.

Financial Environment

Financial system, institutions, financial markets, business firms, individuals and global interactions that contribute to an efficiently operating economy money shit that makes the economy go round

Financial Management

Involves financial planning, asset management and fund raising decisions to enhance the value of businesses

Investments

Involves the sale or marketing of securities, analysis of securities, and the management of investment risk through portfolio diversification

Debt Securities

Obligations to repay borrowed funds

Financial Institutions

Organizations that help the financial system operate efficiently and transfer funds from savers and investors to individuals, businesses and governments that seek to spend or invest the funds in physical assets Banks and shit that fuel economy. paying' mad bitches so they can make it rain on physical assets

Common Stocks

Ownership shares in corporations

Financial Markets

Physical locations (or electronic forums) that facilitate the flow of funds

Secondary Markets

Physical locations or electronic forums where debt (bonds and mortgages) and equity securities are traded

Entrepreneurial Finance

Study of how growth driven, performance focused, early staged firms raise financial capital and manage their operations and assets

Personal Finance

Study of how individuals prepare for financial emergencies, protect against premature heath and the loss of property, and accumulate wealth over time

T/F: Personal finance is the study of how individuals prepare for financial emergencies, protect against premature death and property losses, and accumulated wealth

TRUE

T/F: Finance is the study of how individuals, institutions, and businesses acquire, spend and manage money and other financial resources

TRUE except governments are included as well

Finance

The study of how individuals, institutions, governments and businesses acquire, spend and manage money/other financial assets.

Capital Markets

Where debt instruments or securities with maturities longer than one year and corporate stocks or equity securities are issued and traded

Bond Markets

Where debt securities with longer term maturities are originated and traded

Money Markets

Where debt securities with maturities of one year or less are issued and traded

Derivative Securities Markets

Where financial contracts or instruments that derive their values from underlying debt and equity securities are originated and traded

Mortgage Markets

Where loans to purchase real estate are originated and traded

Debt Markets

Where money market securities, bonds and mortgages are originated and traded

Equity Securities Markets

Where ownership rights in corporations are initially sold and traded

Primary Markets

Where the initial offering or organization of debt and equity securities takes place