Chapter+01,+2+-+Financial+Markets-1

Chapter+01,+2+-+Financial+Markets-1 - Day 02: Chapter 01 4...

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Money Commodity Money Representative Money Fiat Money Medium of Exchange Store of Value Unit of Piece of Eight Currency Day 02: Chapter 01 1
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Financial Markets Primary and Secondary A transaction takes place in the primary market when the issuer sells the security to an investor. It must be the first time that security has been sold. An Dealer and Auction The purpose of an auction market is to match buyers and sellers. Dealers buy and sell (to make a profit). Brokers and The New York Stock Exchange and the NASDAQ are secondary markets. Day 02: Chapter 01 2
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Financial Market Reporting Day 02: Chapter 01 3
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Corporation Advantages Limited liability Unlimited life Separation of ownership and management Transfer of ownership is easy Disadvantages Separation of ownership and management (agency problem) Double taxation (income taxed at the corporate rate and then dividends taxed A legal “person” distinct from owners and a resident of a state
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Unformatted text preview: Day 02: Chapter 01 4 Sole Proprietorship Advantages Easiest to start Least regulated Taxed once as personal income Disadvantages Limited to life of owner Equity capital limited to owners personal Advantages Two or more owners Relatively easy to start Income taxed once as personal income Disadvantages Unlimited liability General partnership Limited partnership Business owned by one Partnership Business owned by two or more persons Day 02: Chapter 01 5 Financial Management Ethics Are financial managers ethical? Does the goal of financial management appeal to you? How is the Sarbanes-Oxley Act of 2002 (Sarbox) related to ethics? What is the agency problem? How can it be resolved? Is resolving it too expensive? The goal of financial management is to maximize the current value per share of the existing stock. Day 02: Chapter 01 6...
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Chapter+01,+2+-+Financial+Markets-1 - Day 02: Chapter 01 4...

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