chapter 2 - Name: Nguyen Thi Lan Thanh Student ID:1236311...

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Name: Nguyen Thi Lan Thanh Student ID:1236311 Class: Friday Morning HOMEWORKS CHAPTER 2 2.2/ Describe the different ways in which capital can be transferred from suppliers of capital to those who are demanding capital. Direct transfers of money and securities occur when a business sells its stocks and bonds directly to savers without going through any type of financial institution. Transfers may also go through an investment bank (iBank) such as Citigroup, which underwrites the issue. Transfers can also be made through a financial intermediary such as a bank, an insurance company, or a mutual fund. 2.3/ Is an initial public offering an example of a primary or secondary market transaction? Explain. An initial public offering is an example of a primary market transaction. Primary market is market for new issues of securities. A market is primary if the proceeds of sales go to the issuer of the securities sold. Secondary market is market where securities are traded after they are initially offered in the primary market. 2.7/ Differentiate between dealer markets and stock markets that have a physical location. A market in which transactions occur between principals acting as dealers buying and selling for their own accounts , rather than between brokers acting as agents for buyers and sellers . One example is the market for treasuries . A stock market is a public market for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately. CHAPTER 3 QUESTIONS 3.2/ Who are some of the basic users of financial statement, and how do they use them?
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Business enterprise, shareholders, stakeholders and CEO are some of the basic users of financial statement. There are four basic financial statements: The balance sheet, which shows what assets the company owns and who has claims on those assets as of a given date. The income statement, which shows the firm’s sales and costs (thus profits) during some past period. The statement of cash flows, which shows how much cash the firm began the year with, how much cash it ended up with, and what it did to increase or decrease its cash. The statement of stockholders’ equity, which shows the amount of equity the stockholders had at the start of the year, the items that increased or decreased equity, and the equity at the end of the year. 3.4/ Explain the following statement: While the balance sheet can be thought of as a snapshot of a firm’s financial position at a point in time, the income statement reports on operations over a period of time. The balance sheet, which shows what assets the company owns and who has claims on those assets as of a given date. The income statement, which shows the firm’s sales and costs (and thus profits) during some past
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This note was uploaded on 11/23/2011 for the course MANAGEMENT 101 taught by Professor Nguyen during the Spring '11 term at Troy.

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chapter 2 - Name: Nguyen Thi Lan Thanh Student ID:1236311...

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