4500.10 - Topic 1 Finance and Global Competition Purpose To integrate major concepts of macro ¡nance and business strategy on a global scale How

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Unformatted text preview: Topic 1: Finance and Global Competition Purpose: To integrate major concepts of macro ¡nance and business strategy on a global scale How should we think about corporations? • Consider the corporation as an intermediary between investors and the basic activities of the ¡rm. • The securities issued by the corporation represent income from a package of activities. • To the investors, any particular corporation represents a small part of a diversi¡ed portfolio. • Corporation is part of a webwork of interactions among various economic sectors. Highlights of Macro-Finance Theory • Ef¡cient money and capital markets are essential to assure adequate capital formation and economic growth. • Capital is created when resources used to make tools for future use • Since antiquity, cultures have devised means to share the ownership of major capital assets (such as ships) in order to diversify the risk of loss Highlights of Macro-Finance Theory • Money is something accepted as a means of exchange, – allowing values of different things to be expressed in terms of money (money is a unit of accounting) – thus, money can be used to store value. • Eurocurrency – Examples: Eurodollars, Euro-Yen – Regulatory Issues – Role in international markets Highlights of Macro-Finance Theory • Primary securities: – economic unit adds ¡nancial liabilities • Indirect securities: – issued by ¡nancial intermediaries, which in turn hold primary securities – examples: bank deposits and insurance policies Highlights of Macro-Finance Theory • Derivative securities: – value derived through contractual relationship with primary securities – examples: forward contracts, futures, options, and swaps...
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This note was uploaded on 04/15/2011 for the course FINA 4500 taught by Professor Staff during the Spring '08 term at North Texas.

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4500.10 - Topic 1 Finance and Global Competition Purpose To integrate major concepts of macro ¡nance and business strategy on a global scale How

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