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