chap 1 &2 - IMPORTANT POINT TO NOTE! Finance...

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Finance involves Future time. Τ= 0 Τ= Future Decision Expected Outcome 1,2…n (return) RISK of deviation UNCERTAINTY Risk Calculation is on Historical Data T=0 T=-n IMPORTANT POINT TO NOTE!
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Chapter 1 Understanding Capital Mkts Learning Objectives What is Cap Mkts? Why study CM? What is the terminology of Cap Mkts? What is the investment environment? What is the Investment decision process? What are important considerations in Capital Mkts?
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Overview of CM What is it?  4 BASIC AREAS IN FINANCE Corporate Finance Investments Financial Institutions International Finance
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What is investments?   Corporate Finance Deals with projects Answers 3 main questions: What long-term projects are appropriate to invest in? What is the best way to finance these projects? e.g. Borrow money OR dilute ownership How project’s financial activities will be managed? e.g. collecting from customers OR paying suppliers
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What is investments?   Investments Deals with Financial Assets Answers 3 main questions: What determines price of a financial asset? e.g. What is the value of a share of stock or Bond? e.g. is the return on investment reasonable given its risk? What combination of different assets should be held? e.g. what to buy or sell, how much & when?
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What is investments?   Investments Deals with Financial Assets Covers 3 main profession areas Financial Advisors/Stockbrokers Portfolio Managers e.g. professional money managers for individuals or corps Security Analyst e.g. researches & evaluates individual investments in depth
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What is CM?   Financial Institutions Deals with Financial Matters Covers a wide range of financial activities Banks e.g. deals with loans, customer deposits, etc Insurance Companies e.g. receives premiums & invests money
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What is CM?   International Finance Global Deals with same areas from an international perspective Corp finance Investments Financial Institutions
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SAVERS Investors USERS Corporations Capital Markets $$ CM Overview
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chap 1 &2 - IMPORTANT POINT TO NOTE! Finance...

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