Chapter 1

Chapter 1 - The determining factor is time. Money Market of...

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Finance- the art and science of managing money Financial Manager- Actively manages the financial affairs of any type of business, whether financial, or non financial; private or public Repay Suppliers Demands Intermediation (Banks) Suppliers: “savers”: Individuals, Savings accounts, Retirement, 401k’s, “Investing.” Can Be: Government, Corporations, Individuals Demands: “borrowers”: Take out a loan, Stocks and Bonds Banks: Brokers, “Meryl Lynch” Constant Change = interest Rates Government Collects Taxes April 15, thus the spike of income. One major Difference in perspective and emphasis between finance and accounting is that accountants generally use the accrual methods, while finance the focus in on cash flows Money Market and Capital Market
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Unformatted text preview: The determining factor is time. Money Market of investment or instrument of 1 year or less maturity Capital market is a market of investment or instrument of anything greater than 1 year. Bonds > 1 year Capital Market Stock > 1 year Capital Market Risk => Systematic/Systemic Risk, Non-Systematic/Non-Systemic Systemic Risk: Impacts whole economy, with no means of preparation S.A. War, Weather, Recession/Depression Big Risk, System Wide Risk, Collapse financial Institutions Non-Systemic: Individual Risk, Specified Risk Locust Invasion in Corn Crops: Hurts farmers, drives the price of corn up, but not much else Price Oil Rises: Pay more, but can prepare for it, and find alternate means of energy....
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Chapter 1 - The determining factor is time. Money Market of...

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