Securities Exchanges:
Organized Exchanges:
NYSE, American, Pacific, Chicago, Philadelphia
Central trading location
Only members can use the exchange
Over the counter Markets
No central trading location.
Money Markets:
Collection of markets with no
Pension Funds
Provide retirement programs for business as part of employee benefit programs.
Obtain money from employee and employer contributions during employess working
years, then provide monthly retirement payments.
Investment Funds
Sell shares to
Ordinary Annuity Payments or receipts occur at the end of each period.
Annuity Due Payments or receipts occur at the beginning of each period.
Ordinary Annuities & Annuities Due:
PVA: PV is calculated one (or more) periods before the first cash flow.

Multiple Cash FlowsSolving for the TVM problems with multiple cash flows.
Many business situations call for computing present value of a series of expected
future cash flows.
determining market value of security
deciding whether to make capital invest
The ratio of the standard deviation of distribution to the mean of the distribution.
Measure of relative risk
CV=standard deviation/R
Expected return of portfolio made up of two assets is just a weighted average of the
expected returns of the individual
A firms financial statements can be analyzed from perspective of different stakeholders.
Important perspectives: 1) Stockholder, 2) Manager, and 3) Creditor.
Stockholders perspective:
Centers on value of stock held
Interest in the financial statements
The Financial Environment and the Level of Interest Rates
Financial System at Work:
Competitive
Money is aggregated in small amounts and loaned in large amounts
Financial markets benefit consumers
Moving Funds from Lenders to Borrowers:
Budget positio
Efficiency Ratios:
Asset turnover ratios
Measure how efficiently firm management uses assets to generate sales.
Efficiency Ratios focus on inventory, receivables and use of fixed and total assets.
Used by management to identify areas of inefficiency.
Earning per share (EPS) ratio measures income after taxes generated by firm for each
share outstanding. = Net income/Shares outstanding
Priceearnings (P/E) ratio ties firms earning per share to price per share.
P/E ratio= Price per share/EPS
Three ways t
Substitute teacher mainly went over financial calculator problems.
Usefulness of Amortization:
1.
2.
Determine Interest Expense
Companies use to determine best method
Solving Mixed Flows using CF registry:
For CFo: This is always the cash flow occurring a