chapter 1 note - Omar M. Al Nasser, Ph.D., MBA. Visiting...

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1 Omar M. Al Nasser, Ph.D., MBA. Visiting Assistant Professor of Finance School of Business Administration University of Houston-Victoria Email: Chapter 1 Role of Financial Markets and Institutions Outline Overview of Financial Markets Types of Financial Markets How Financial Markets Facilitate Corporate Finance and Investment Management Securities Traded in Financial Markets Money Market Securities Capital Market Securities Derivative Securities Valuation of Securities in Financial Markets Market Pricing of Securities Market Efficiency Financial Market Regulation Disclosure Regulatory Response to Financial Scandals Global Financial Markets International Corporate Governance Global Integration Role of the Foreign Exchange Market Role of Financial Institutions in Financial Markets Role of Depository Institutions Role of Nondepository Financial Institutions Comparison of Roles among Financial Institutions
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2 Chapter 1/Role of Financial Markets and Institutions Overview of Financial Institutions Competition between Financial Institutions Consolidation of Financial Institutions Global Expansion by Financial Institutions Key Concepts 1 . Explain the role of financial intermediaries in transferring funds from surplus units to deficit units. 2. Introduce the types of financial markets available and their functions. 3. Introduce the various financial institutions that facilitate the flow of funds. 4. Provide a preview of the course outline. Emphasize the linkages between the various sections of the course. POINT/COUNTER-POINT: Will Computer Technology Cause Financial Intermediaries to Become Extinct? POINT: Yes. Financial intermediaries benefit from access to information. As information becomes more accessible, individuals will have the information they need before investing or borrowing funds. They will not need financial intermediaries to make their decisions. COUNTER-POINT: No. Individuals rely not only on information, but also on expertise. Some financial intermediaries specialize in credit analysis so that they can make loans. Surplus units will continue to provide funds to financial intermediaries rather than make direct loans, because they are not capable of credit analysis, even if more information about prospective borrowers is available. Some financial intermediaries no longer have physical buildings for customer service, but they still require people who have the expertise to assess the creditworthiness of prospective borrowers. WHO IS CORRECT? Use the Internet to learn more about this issue. Offer your own opinion on this issue. ANSWER: Computer technology may reduce the need for some types of financial intermediaries such as brokerage firms, because individuals can make transactions on their own (if they prefer to do so). However, loans will still require financial intermediaries because of the credit assessment that is needed.
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This note was uploaded on 09/21/2011 for the course FINANCE 3321 taught by Professor Jianjundu during the Fall '11 term at University of Houston-Victoria.

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chapter 1 note - Omar M. Al Nasser, Ph.D., MBA. Visiting...

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