FIN401-Chapter 1 notes

Fin401 chapter 1 notes

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Unformatted text preview: Chapter 1: Investments – Background and Issues and Investments and Financial Assets Investments Essential nature of investment → Reduced current consumption Reduced → Planned later consumption Planned Real assets → Used to produce goods and services produce Financial assets → Claims on real assets Claims Major Classes of Financial Assets Major Debt → Money market instruments Money → Capital market instruments Capital Common stock Common Preferred stock Preferred Derivatives Derivatives Corporations Corporations Separation of ownership and management → Owners (principals) don’t equal managers (agents) (agents) → Agency issues/costs Agency Corporate governance and ethics → Accounting scandals Accounting → Misleading research reports Misleading → Auditors: conflict of interest Auditors: → Sarbanes-Oxley Act Sarbanes-Oxley The Investor’s Portfolio The Asset allocation Asset → Choice among broad classes of assets broad Security selection Security → Choi...
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This note was uploaded on 12/10/2011 for the course FIN 401 taught by Professor Staff during the Spring '08 term at Miami University.

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