Finance research paper

Finance research paper - Finance By Christopher Books Mr....

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Finance By Christopher Books Mr. Jeff Scott English 1301-37 8 December 2003
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Brooks 13 Finance Introduction- Finance I. Financial Instruments a. Stocks b. Preferred Stock c. Common Stock d. Bonds II. Financial Markets a. Buying Stocks i. Location of Stocks Exchanges ii. Operation of a Stock Exchanges b. Over the Counter Stock Markets i. Governmental Supervision III. Banking and Financial Institutions a. Types of Financing i. Short-term Financing ii. Intermediate-term Financing iii. Long-term Financing b. Types of Deposits i. Demand Deposit ii. Negotiable Order of Withdrawals iii. Savings Accounts c. Involvement from the Government
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Brooks 13 i. Reserve Requirements ii. Federal Deposits Insurance Corporation IV. Conclusion
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Brooks 13 Christopher Brooks Mr. Scott English 1301-37 8 December 2003 Finance Finance is the ability of a person or a firm attempting to raise capital through the process of selling stocks, bonds, or promissory notes. The theory of finance is “an integrated body of knowledge constructed around the goal of maximizing shareholder wealth and the principles of the time value of money, leverage, diversification, and an investment’s rate of return versus its risk” (Snavely 599). The study of finance was originally associated with the field of economics (Baum 17). The environment of business changed so much that there was “an increased need of study detailed business problems and processes” (Snavely 599). The field of finance underwent changes in the 1930s and the Great Depression. During this time period, people associated with finance were concerned with such issues as bankruptcy, liquidation, reorganization, and governmental regulations. During the 1940s and the 1950s, the field concentrated on fund raising and stockholders’ equity and liability (Snavely 599). In the late 1950s, finance began allowing managers to make decisions concerning firms’ financial operations. These changes occurred because of the understanding of capital budgeting. This advancement “increased understanding of the cost of capital and the valuation of financial assets”. After managers began to realize the importance of these two areas, people and companies began taking more risks, hoping to increase profits (Snavely 599). The field of finance is ever-changing. Snavley adds, “It
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Brooks 13 (finance) is constantly reacting to activities in the economy and new theoretical ideas” (599). Three distinct areas make up the field of finance: financial instruments, financial markets, and banking and financial institutions (Snavely 599). Financial instruments, usually stocks and bonds, are written obligations on which money is exchanged (Brownstone, Carruth, and Frank 115). Financial markets are “the mechanisms used to trade the financial instruments” (Snavely 599). Financial institutions are institutions such as banks and saving and loan associations that use their funds to finance the purchases of financial instruments (Terry 159). Financial institutions finance these instruments through promissory notes.
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This note was uploaded on 09/05/2011 for the course BUS 340 taught by Professor Dudu during the Spring '11 term at Grand Canyon.

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Finance research paper - Finance By Christopher Books Mr....

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