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Ec 173A – FINANCIAL MARKETS LECTURE OUTLINE Foster, UCSD July 5, 2010 TOPIC 1 – INTRODUCTION TO FINANCE & INVESTING A. Introduction to Investment 1. Definitions: a) Finance -- the art and science of managing money. b) Financing -- raising money (financial capital). c) Financial instruments or securities d) Portfolio e) Investment 2. Two Basic Investment Strategies: a) Passive. b) Active. 3. Philosophies of Financial Asset Prices: a) Castles in the Air. b) Firm Foundations View B. The Financial Sector of the Economy 1. Supply, Demand, and Flow of Funds: a) Corporation finance. b) Government finance. c) Supply of and demand for funds. Direct Placement Investors (Lenders) Corp/Govt (Borrowers) Retained Earnings Secondary Financial Markets Flow of Funds $ $ Financial Intermediaries Primary Financial Markets Bond Deposits , Shares Stocks , Bonds Stocks , Bonds Loans, Promissor y Notes % % % %
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Ec 173A INTRO FINANCE/INVESTING OUTLINE p. 2 of 4 2. Financial Institutions: a) Purpose of financial institutions.
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