Chap1 Flashcards
(85 cards)
Finance
Helps people and businesses make decisions about when to buy when to sell and about what to buy and went to sell
Financial management
Is the art of science of managing wealth
Create or preserves that can make value of the assets of an individual small business or corporation
Cycle of money
The movement of money from lender to borrower and back again
What are the two things that remain constant
One the cycle of money 2 The economic objective of improving each participant’s wealth
What are the four main areas that finance is partitioned into
- Corporate finance •investments
- financial institutions in markets
- international finance
Corporate finance
The set of financial activities that support the operations of corporations or businesses its use of money and those decisions that affect the wealth of the owners
Investments
Are generally like to re-centering on the buying and selling of assets both real and financial
Real assets
The physical assets such as property buildings and commodities including corn oil and
Financial assets
Intangible assets such as stocks And bonds
Financial institutions in markets
Are the organize financial in term media Aries and the forum that promote the cycle of money
What are the four ways one can classify The financial market
- By type of asset traded
- by the maturity of the asset
- by the owner of the asset
- by the method of sale
Equity markets
We are stocks are bought and sold
Debt markets
Where bonds are bought and sold
Derivative markets
Where future contracts on commodities are bought and sold or where options on equity future or currencies are bought and sold option markets
Foreign exchange markets
Where currencies are bought and sold
Maturity means what
The length of time the borrower has to pay back the borrowed funds
Money markets
These assets are short term loans sometimes as short as a day or two
Capital markets
Acids that have maturities over a year
Long term loans may include bonds are stock
Primary market
When a company puts out its own stock so that money can be invested back into the company
Secondary market
When the money of a sale goes to the initial buyer
Dealer markets
When a buyer buys things at a set price and then sells them thanks such a stocks and bonds or like a car dealership selling cars
What are the three main categories that financial management is divided into
- !Capital budgeting
- capital structure
- working capital management
Capital budgeting
The process of planning a valuating comparing and selecting a long-term operation project
Each company Picks it’s business based on its ability to generate a profit
example make you sell shoes coke sells beverages
Capital structure
The means by which a company finances it’s business activities. for public companies usually a mix of bonds and stocks that and equity sold to investors an owners
This answers the question where do we raise the money to conduct our business activities