Chapter 1. Investments: Background and Issues. Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
|
|
- Barbra Williamson
- 5 years ago
- Views:
Transcription
1 Chapter 1 Investments: Background and Issues McGraw-Hill/Irwin Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
2 1.1 Real Versus Financial Assets 1-2
3 Real Versus Financial Assets Essential nature of investment Reduce current consumption in hopes of greater future consumption Real Assets Used to produce goods and services: Property, plant & equipment, human capital, etc. Financial Assets Claims on real assets or claims on asset income 1-3
4 Table 1.1. Balance Sheet U.S. Households,
5 Real versus Financial Assets All financial assets (owner of the claim) are offset by a financial liability (issuer of the claim). When we aggregate over all balance sheets, only real assets remain. Hence the net wealth of an economy is the sum of its real assets. 1-5
6 Table 1.2 Domestic Net Worth,
7 1.2 A Taxonomy of Financial Assets 1-7
8 Major Classes of Financial Assets or Debt Securities o Money market instruments Bank certificates of deposit, T-bills, commercial paper, etc. o Bonds o Preferred stock Common stock o Ownership stake in the entity, residual cash flow Derivative securities o A contract whose value is derived from some underlying market condition. 1-8
9 1.3 Financial Markets and the Economy 1-9
10 Financial Markets Informational Role of Financial Markets o Do market prices equal the fair value estimate of a security s expected future risky cash flows? o Can we rely on markets to allocate capital to the best uses? What other mechanism could we use to allocate capital? What would be the advantages and disadvantages of another system? 1-10
11 Consumption Timing o People tend to smooth consumption over time. o If one has more than enough cash to meet their basic needs in the current time period one might shift consumption through time by investing the surplus. 1-11
12 Allocation of Risk o Investors can choose a desired risk level Bonds versus stock of a given company Bank CD versus company bond Tradeoff between risk and return? 1-12
13 Separation of Ownership and Management Large size of firms requires separation of ownership and management o In 2008 GE had over $800 billion in assets and over 650,000 stockholders o Owners (principals) Managers (agents) o Agency costs: Owners interests may not align with managers interests o Mitigating factors: Performance based compensation Boards of Directors may fire managers Threat of takeovers 1-13
14 Example 1.1 In February 2008, Microsoft offered to buy Yahoo at $31 per share when Yahoo was trading at $ Yahoo rejected the offer, holding out for $37 a share. Billionaire Carl Icahn led a proxy fight to seize control of Yahoo s board and force the firm to accept Microsoft s offer. He lost, and Yahoo stock fell from $29 to $21. Did Yahoo managers act in the best interests of their shareholders? 1-14
15 Corporate Governance and Corporate Ethics Business and market require trust to operate efficiently o Without trust additional laws and regulations are required o All laws and regulations are costly Governance and ethics failures have cost our economy billions if not trillions of dollars. o Eroding public support and confidence in market based systems 1-15
16 Corporate Governance and Corporate Ethics Accounting Scandals o Enron, WorldCom, Misleading Research Reports o Citicorp, Merrill Lynch, others Auditors: Watchdogs or Consultants? o Arthur Andersen and Enron 1-16
17 Corporate Governance and Sarbanes-Oxley Act Corporate Ethics o Increases the number of independent directors on company boards o Requires the CFO to personally verify the financial statements o Created a new oversight board for the accounting/audit industry o Charged the board with maintaining a culture of high ethical standards 1-17
18 1.4 The Investment Process o Asset allocation Choosing the percentage of funds in asset classes Stocks Bonds Alternative Assets Money market securities 60% 30% 6% 4% o Security selection & analysis Choosing specific securities w/in an asset class o The asset allocation decision is the primary determinant of a portfolio s return 1-18
19 1.5 Markets Are Competitive o Risk-return trade-off: o Assets with higher expected returns have higher risk. Average Annual Return Minimum (1931) Maximum (1933) Stocks About 12% -46% 55% A stock portfolio can be expected to lose money about 1 out of every 4 years. o Bonds have a much lower average rate of return (under 6%) and have not lost more than 13% of their value in any one year. 1-19
20 Risk-Return Trade- Off o How do we measure risk? o How does diversification affect risk? To be studied in the later chapters 1-20
21 Efficient Markets o Market efficiency: o Securities should be neither underpriced nor overpriced on average o Security prices should reflect all information available to investors o Whether we believe markets are efficient affects our choice of appropriate investment management style. 1-21
22 Active vs. Passive Management Active Management (inefficient markets) Finding undervalued securities Timing the market Asset Allocation Security Selection Passive Management (efficient markets) No attempt to find undervalued securities No attempt to time Holding a diversified portfolio: Indexing Constructing an efficient portfolio 1-22
23 1.6 The Players 1-23
24 The Players Business Firms net borrowers Households net savers Governments can be both borrowers and savers Financial Intermediaries Connectors of borrowers and lenders o Commercial Banks Traditional line of business: Make loans funded by deposits o Investment companies o Insurance companies o Pension funds o Hedge funds 1-24
25 The Players Cont. Investment Bankers o Firms that specialize in primary market transactions o Primary market: A market where newly issued securities are offered to the public. The investment banker typically underwrites the issue. o Secondary market A market where pre-existing securities are traded among investors. 1-25
26 Investment Bankers Investment Bankers o Commercial and investment banks functions and organizations were separated by law from 1933 to o Post 1999 large investment banks, collectively known as Wall Street, operated independently from commercial banks, although many of the large commercial banks increased their investment banking activities, pressuring profit margins of investment banks. o In September 2008 major investment banks either went bankrupt, reorganized as commercial banks or were purchased by commercial banks as a result of the collapse of the mortgage markets. 1-26
27 Investment Bankers o Some investment banks chose to become commercial banks to obtain deposit funding and government assistance o All of the major investment banks are now under the much stricter commercial bank regulations. What are the implications for innovation and capital issuance resulting from these changes? 1-27
28 Table 1.3 Balance Sheet of Commercial Banks,
29 Table 1.4 Balance Sheet of Nonfinancial U.S. Business,
30 1.7 Recent Trends Globalization Securitization Financial Engineering Information and Computer Networks 1-30
31 Globalization Domestic firms compete in global markets Performance in one country or region depends on other regions Opportunities for better returns & implications for risk o Managing foreign exchange o International diversification reduces risk o Instruments and vehicles continue to develop (ADRs and WEBs) o Information and analysis improves 1-31
32 Securitization Loans of a given type such as mortgages are placed into a pool and new securities are issued that use the loan payments as collateral. The securities are marketable and are purchased by many institutions. Shadow banking system End result is more investment opportunities for purchasers, and spreading loan credit risk among more institutions 1-32
33 Securitization Securitization has grown rapidly due to Changes in financial institutions and regulation permitting its growth, particularly lower capital requirements on securitized loans, Improvement in information capabilities, Credit enhancement provided by pool issuers has improved marketability. 1-33
34 Financial Engineering Repackaging cash flows of a security to enhance marketability Bundling and unbundling of cash flows o Bundling: Combining more than one asset into a composite security, for example securities sold backed by a pool of mortgages. o Unbundling Selling separate claims to the cash flows of one security, for example a CMO 1-34
35 Figure 1.2 Building a Complex Security 1-35
36 Figure 1.3 Mortgage Security 1-36
37 Computer Networks Online low cost trading Information made cheaply and widely available Direct trading among investors via electronic communication networks What have been the effects on Wall Street firms profit margins? o How has Wall Street responded? 1-37
38 The Future Globalization will continue and investors will have far more investment opportunities than in the past Securitization will continue to grow after the crisis Continued development of derivatives and exotics, more regulation for over the counter derivatives Strong fundamental foundation of understanding is critical Understanding corporate finance requires understanding investments 1-38
Financial Investment
Financial Investment Dagmar Linnertová Dagmar.linnertova@mail.muni.cz Seminars Excercises in a seminars evaluated by lecturer Questions as a preparation for final test (2, 1 or 0 points) maximum points
More informationThe Investment Environment. Chapter 1
The Investment Environment Chapter 1 Real & Financial Assets Real assets = assets used to produce goods and services (productive capacity) physical assets (land, buildings, machinery etc.) human assets
More information0 questions at random and keep in order
Page 1 of 8 This chapter has 42 questions. Scroll down to see and select individual questions or narrow the list using the checkboxes below. 0 questions at random and keep in order s - (37) - (37) s -
More informationChapter 1 Introduction to Corporate Finance
Chapter 1 Introduction to Corporate Finance Konan Chan Financial Management, Fall 2018 Topics Covered Corporate finance and financial manager Forms of business organization Goal of financial management
More informationPART THREE FUNDAMENTALS OF FINANCIAL INSTITUTIONS. Copyright 2012 Pearson Prentice Hall. All rights reserved.
PART THREE FUNDAMENTALS OF FINANCIAL INSTITUTIONS Copyright 2012 Pearson Prentice Hall. All rights reserved. CHAPTER 7 Why Do Financial Institutions Exist? Copyright 2012 Pearson Prentice Hall. All rights
More informationBBM2153 Financial Markets and Institutions Prepared by Dr Khairul Anuar
BBM2153 Financial Markets and Institutions Prepared by Dr Khairul Anuar L3: Why Do Financial Institutions Exist? www. notes638.wordpress.com Copyright 2015 Pearson Education, Ltd. All rights reserved.
More informationThe Financial System. Sherif Khalifa. Sherif Khalifa () The Financial System 1 / 55
The Financial System Sherif Khalifa Sherif Khalifa () The Financial System 1 / 55 The financial system consists of those institutions in the economy that matches saving with investment. The financial system
More informationInvestments: An Introduction
Investments: An Introduction 10e Chapter 2: Securities Markets Herbert B. Mayo Market Makers - Security Dealers - Specialists Offer to buy and sell for their own accounts Spread - difference between the
More informationCh. 2 AN OVERVIEW OF THE FINANCIAL SYSTEM
Ch. 2 AN OVERVIEW OF THE FINANCIAL SYSTEM To "finance" something means to pay for it. Since money (or credit) is the means of payment, "financial" basically means "pertaining to money or credit." Financial
More informationFinancial Institutions, Markets, and Money, 9 th Edition
Power Point Slides for: Financial Institutions, Markets, and Money, 9 th Edition Authors: Kidwell, Blackwell, Whidbee & Peterson Prepared by: Babu G. Baradwaj, Towson University And Lanny R. Martindale,
More informationFinancial Markets and Institutions, 9e (Mishkin) Chapter 2 Overview of the Financial System. 2.1 Multiple Choice
Financial Markets and Institutions, 9e (Mishkin) Chapter 2 Overview of the Financial System 2.1 Multiple Choice 1) Every financial market performs the following function: A) It determines the level of
More information1. Primary markets are markets in which users of funds raise cash by selling securities to funds' suppliers.
Test Bank Financial Markets and Institutions 6th Edition Saunders Complete download Financial Markets and Institutions 6th Edition TEST BANK by Saunders, Cornett: https://testbankarea.com/download/financial-markets-institutions-6th-editiontest-bank-saunders-cornett/
More informationFinancial Markets and Institutions, 8e (Mishkin) Chapter 2 Overview of the Financial System. 2.1 Multiple Choice
Financial Markets and Institutions, 8e (Mishkin) Chapter 2 Overview of the Financial System 2.1 Multiple Choice 1) Every financial market performs the following function: A) It determines the level of
More informationChapter 2 Firms and the Financial Market
Chapter 2 Firms and the Financial Market Slide Contents Learning Objectives Principles Used in this Chapter 1.The Basic Structure of the U.S. Financial Markets 2.The Financial Marketplace Financial Institutions
More informationChapter 11: Financial Markets Section 1
Chapter 11: Financial Markets Section 1 Objectives 1. Describe how investing contributes to the free enterprise system. 2. Explain how the financial system brings together savers and borrowers. 3. Explain
More informationEconomics of Money, Banking, and Financial Markets, 11e (Mishkin) Chapter 2 An Overview of the Financial System. 2.1 Function of Financial Markets
Economics of Money, Banking, and Financial Markets, 11e (Mishkin) Chapter 2 An Overview of the Financial System 2.1 Function of Financial Markets 1) Every financial market has the following characteristic.
More informationThe Financial System. Sherif Khalifa. Sherif Khalifa () The Financial System 1 / 52
The Financial System Sherif Khalifa Sherif Khalifa () The Financial System 1 / 52 Financial System Definition The financial system consists of those institutions in the economy that matches saving with
More informationBOGAZICI UNIVERSITY - DEPARTMENT OF ECONOMICS FALL 2016 EC 344: MONEY, BANKING AND FINANCIAL INSTITUTIONS - PROBLEM SET 2 -
BOGAZICI UNIVERSITY - DEPARTMENT OF ECONOMICS FALL 2016 EC 344: MONEY, BANKING AND FINANCIAL INSTITUTIONS - PROBLEM SET 2 - DUE BY OCTOBER 10, 2016, 5 PM 1) Every financial market has the following characteristic.
More informationBFF1001 Week 1 Topic 1: What is finance
BFF1001 Week 1 Topic 1: What is finance Definitions Deficit A deficit unit saves less money than it invests A deficit unit needs funds If saving is less than investment, a deficit occurs Surplus A surplus
More informationChapter Summary and Learning Objectives
CHAPTER 7 Firms, the Stock Market, and Corporate Governance Chapter Summary and Learning Objectives 7.1 Types of Firms (pages 204 206) Categorize the major types of firms in the United States. There are
More informationFinancial Management Principles and Applications 13th Edition Titman TEST BANK
Financial Management Principles and Applications 13th Edition Titman TEST BANK Full download at: https://testbankreal.com/download/financial-management-principles-andapplications-13th-edition-titman-test-bank/
More informationChapter 2 Securities Markets. T 1. A major function of organized securities markets is to facilitate the transfers of securities among investors.
Chapter 2 Securities Markets TRUE/FALSE T 1. A major function of organized securities markets is to facilitate the transfers of securities among investors. T 2. A round lot is the general unit for trading
More informationMergers and Acquisitions
Takeovers Takeover: transfers the control right of the firm from one group to another Merger Mergers and Acquisitions Acquisition Acquisition of Stock, 2018 Takeovers Proxy Contest Going Private Acquisition
More informationInternational Finance
International Finance FINA 5331 Lecture 3: The Banking System William J. Crowder Ph.D. Historical Development of the Banking System Bank of North America chartered in 1782 Controversy over the chartering
More informationChapter 2 Securities Markets. T 1. A major function of organized securities markets is to facilitate the transfers of securities among investors.
Chapter 2 Securities Markets TRUE/FALSE T 1. A major function of organized securities markets is to facilitate the transfers of securities among investors. T 2. A round lot is the general unit for trading
More informationCHAPTER 2: ASSET CLASSES AND FINANCIAL INSTRUMENTS
Chapter 2 - Asset Classes and Financial Instruments CHAPTER 2: ASSET CLASSES AND FINANCIAL INSTRUMENTS PROBLEM SETS 1. Preferred stock is like long-term debt in that it typically promises a fixed payment
More informationChapter 1. An Introduction to Investments: Summary Notes
Chapter 1. An Introduction to Investments: Summary Notes (Reading Chapters 1 and 2) This chapter introduces important financial concepts that apply to investments and investment decision making. These
More informationChapter. Mutual Funds. McGraw-Hill/Irwin. Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter Mutual Funds McGraw-Hill/Irwin Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved. Mutual Funds: Overview Our goal in this chapter is to understand the different types of mutual
More informationThe Financial System. Instructor: Prof. Menzie Chinn UW Madison
Economics 435 The Financial System (3/4/13) Instructor: Prof. Menzie Chinn UW Madison Spring 2013 Introduction Financial institutions serve as intermediaries between savers and borrowers, so their assets
More informationOverview of the Financial Environment. Dagmar Linnertová Office 408
Overview of the Financial Environment Dagmar Linnertová Dagmar.linnertova@mail.muni.cz Office 408 Contents The Role of Financial Markets and Institutions Debt and Equity Money Market Capital Market Commodities
More informationFinancial Markets: Allocating Financial Resources
10 10-1 10-2 10-3 Financial Markets: Allocating Financial Resources Explain the role of financial markets in the U.S. economy and identify the key players in these markets Identify the key laws that govern
More informationRole of Financial Markets and Institutions
International Financial Management By Jeff Madura Solution Manual 11th Edition International Financial Management By Jeff Madura Solution Manual 11th Edition Test Bank. Completed download Solutions Manual
More informationCOMMUNICATING AND INTERPRETING ACCOUNTING INFORMATION
Chapter 5 COMMUNICATING AND INTERPRETING ACCOUNTING INFORMATION McGraw-Hill/Irwin 2009 The McGraw-Hill Companies, Inc. PLAYERS IN THE ACCOUNTING COMMUNICATION PROCESS Management Preparation CEO, CFO, Accounting
More information1. Only small companies can go through financial markets to obtain financing.
Fundamentals of Corporate Finance 8th Edition Brealey Test Bank Full Download: http://testbanklive.com/download/fundamentals-of-corporate-finance-8th-edition-brealey-test-bank/ Chapter 02 Financial Markets
More informationThe Financial System. Sherif Khalifa. Sherif Khalifa () The Financial System 1 / 74
The Sherif Khalifa Sherif Khalifa () The 1 / 74 The financial system consists of those institutions that match saving with investment. The financial system channels funds from those who save to those with
More informationSolutions to Chapter 2. Financial Markets and Institutions
Solutions to Chapter 2 Financial Markets and Institutions 1. The story of Apple Computer provides three examples of financing sources: equity investments by the founders of the company, trade credit from
More informationChapter 2. An Overview of the Financial System
Chapter 2 An Overview of the Financial System Function of Financial Markets Perform the essential function of channeling funds from economic players that have saved surplus funds to those that have a shortage
More informationNote that there is an overlap between the T/F and multiple-choice questions, as some of the T/F statements are used in multiple-choice questions.
Fundamentals of Financial Management 14th Edition Brigham Houston TEST BANK Complete download test bank for Fundamentals of Financial Management 14th Edition Brigham https://testbankarea.com/download/test-bank-fundamentals-financialmanagement-14th-edition-brigham-houston/
More informationUnderstanding TALF. Abstract. June 2009
Understanding TALF June 2009 PREPARED BY Gregory J. Leonberger, FSA Director of Research Abstract In an effort to revive the credit markets, the Term Asset-Backed Securities Loan Facility ( TALF ) was
More informationPART THREE. Answers to End-of-Chapter Questions and Problems
PART THREE Answers to End-of-Chapter Questions and Problems Mishkin Instructor s Manual for The Economics of Money, Banking, and Financial Markets, Eleventh Edition 58 Chapter 1 ANSWERS TO QUESTIONS 1.
More informationBankers lose interest!
1 Bankers lose interest! Bankers lose interest! How changing financial regulations affect all investors 1 Bankers lose interest! Contact: Doug Steevens Senior Portfolio Manager +44 (0)20 7086 9312 douglas.steevens@aonhewitt.com
More informationFIN 300 Chapter 1: Introduction to Corporate Finance
FIN 300 Chapter 1: Introduction to Corporate Finance 1.1 Corporate Finance and the Financial Manager What is Corporate Finance? Most large corporations centralize their finance function and use it to measure
More informationFunction of Financial Markets
Econ135: Lecture 2 Function of Financial Markets Perform the essential function of channeling funds from economic players that have saved surplus funds to those that have a shortage of funds Direct finance:
More informationoff their risks, and a market may rise to meet the trading demand.
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 1) Only small companies can go through financial markets to obtain financing. 2) The reinvestment of cash back into the
More informationTopics in Banking: Theory and Practice Lecture Notes 1
Topics in Banking: Theory and Practice Lecture Notes 1 Academic Program: Master in Financial Economics (Research track) Semester: Spring 2010/11 Instructor: Dr. Nikolaos I. Papanikolaou The financial system
More informationChapter 1 - Investments: Background and Issues
Chapter 1 - Investments: Background and Issues Investment vs. investments Real assets vs. financial assets Financial markets and the economy Investment process Competitive markets Players in investment
More information1. Allocates scarce capital among competing uses 2. Spreads/shares risk 3. Facilitates inter-temporal trade
Chapter 2: The Financial System What it is: What it does: A network of financial intermediaries (banks, S&Ls, credit unions, etc.), facilitators (credit rating agencies, appraisers, etc.), and markets
More information8.1 Basic Facts About Financial Structure Throughout the World
Economics of Money, Banking, and Fin. Markets, 10e (Mishkin) Chapter 8 An Economic Analysis of Financial Structure 8.1 Basic Facts About Financial Structure Throughout the World 1) American businesses
More informationChapter 2. An Overview of the Financial System. 2.1 Function of Financial Markets
Chapter 2 An Overview of the Financial System 2.1 Function of Financial Markets 1) Every financial market has the following characteristic: A) It determines the level of interest rates. B) It allows common
More informationThe business of making money. Rate of return of a simple asset /1. The role of financial assets /2
1 The business of making money In a modern monetary economy, goods are typically not exchanged for goods but for fiat money. Therefore, even though people are ultimately interested in getting goods, the
More informationChapter 1-3. Topics in Financial Decisions. Financial System and the Economy. Financial system affects the economic performance It consists of
Chapter 1-3 Topics in Financial Decisions Financial system affects the economic performance It consists of Financial markets Financial institutions Money How does each of the above affect the economy?
More informationFunction of Financial Markets
Chapter 2 An Overview of the Financial System Function of Financial Markets Perform the essential function of channeling funds from economic players (households, firms and govt.) that have saved surplus
More informationCorporate Finance 2 - Lesson 4 CHAPTER 17 THRIFT INSTITUTIONS AND MORTGAGE BANKS
CHAPTER 17 THRIFT INSTITUTIONS AND MORTGAGE BANKS 2 Topics Covered in Chapter Thrift Institutions Savings Associations Savings Banks Credit Unions Finance Companies 3 Historical Development of Thrift Institutions
More informationIntroduction. Master Programmes INTERNATIONAL FINANCE. Szabolcs Sebestyén
Introduction Szabolcs Sebestyén szabolcs.sebestyen@iscte.pt Master Programmes INTERNATIONAL FINANCE Sebestyén (ISCTE-IUL) Introduction International Finance 1 / 43 Outline 1 Why Study Money, Banking, and
More informationShadow Banking in China: Implications for Financial Stability and Economic Rebalancing
Shadow Banking in China: Implications for Financial Stability and Economic Rebalancing Prepared for Economics Seminar, Portland State University, May 22, 2015 Yan Liang Willamette University Outline 1.
More informationFIN 540 Initial Public Offerings (IPOs) Why Issue Public Equity?
FIN 540 Initial Public Offerings (IPOs) Why Issue Public Equity? Cost & Benefits of IPOs Why Is There Underpricing? Hot Issues Markets Why Issue Public Equity? 1. lower the cost of capital for the firm
More information25,000,000 Shares Dow 30 SM Enhanced Premium & Income Fund Inc.
PROSPECTUS 25,000,000 Shares Dow 30 SM Enhanced Premium & Income Fund Inc. Common Stock $20.00 per Share Dow 30 SM Enhanced Premium & Income Fund Inc. (the Fund ) is a corporation organized under the laws
More informationSaving, Investment, and the Financial System
Chapter 9 MODERN PRINCIPLES OF ECONOMICS Third Edition Saving, Investment, and the Financial System Outline The Supply of Savings The Demand to Borrow Equilibrium in the Market for Loanable Funds The Role
More information11th-edition-jeff-madura-test-bank/
Financial Markets And Institutions 11th Edition Madura Test Bank Solutions Completed download Financial Markets And Institutions 11th Edition Jeff Madura Test Bank. Solutions Manual download link is included:
More informationCohen & Steers Select Preferred and Income Fund, Inc. Common Shares $25.00 per Share
PROSPECTUS 11,200,000 Shares Cohen & Steers Select Preferred and Income Fund, Inc. Common Shares $25.00 per Share The Fund. Cohen & Steers Select Preferred and Income Fund, Inc. (the Fund ) is a newly
More informationChapter 8. An Economic Analysis of Financial Structure. 8.1 Basic Facts About Financial Structure Throughout the World
Chapter 8 An Economic Analysis of Financial Structure 8.1 Basic Facts About Financial Structure Throughout the World 1) American businesses get their external funds primarily from A) bank loans. B) bonds
More informationCOPYRIGHTED MATERIAL. 1 The Credit Derivatives Market 1.1 INTRODUCTION
1 The Credit Derivatives Market 1.1 INTRODUCTION Without a doubt, credit derivatives have revolutionised the trading and management of credit risk. They have made it easier for banks, who have historically
More informationB) Investment Objectives The primary objectives of this investment policy are legality, safety, liquidity and yield in that order.
POLICY NO. DATE OFFICE OF PRIMARY RESPONSIBILITY (OPR) FIN-23 03/18 Finance 1) POLICY INTRODUCTION AND SCOPE It is the policy of the Las Vegas Convention and Visitors Authority (LVCVA) to invest funds
More informationThe effect of wealth and ownership on firm performance 1
Preservation The effect of wealth and ownership on firm performance 1 Kenneth R. Spong Senior Policy Economist, Banking Studies and Structure, Federal Reserve Bank of Kansas City Richard J. Sullivan Senior
More informationChapter 14. The Mortgage Markets. Chapter Preview
Chapter 14 The Mortgage Markets Chapter Preview The average price of a U.S. home is well over $208,000. For most of us, home ownership would be impossible without borrowing most of the cost of a home.
More informationRise and Collapse of Shadow Banking. Macro-Modelling. with a focus on the role of financial markets. ECON 244, Spring 2013 Shadow Banking
with a focus on the role of financial markets ECON 244, Spring 2013 Shadow Banking Guillermo Ordoñez, University of Pennsylvania April 11, 2013 Shadow Banking Based on Gorton and Metrick (2011) After the
More informationChapter 02 Test Bank - Static
Chapter 02 Test Bank - Static Student: 1. Only small companies can go through financial markets to obtain financing. 2. The reinvestment of cash back into the firm's operations is an example of a flow
More informationReview Exam 1. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Review Exam 1 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Financial markets promote economic efficiency by A) reducing investment. B) channeling
More informationMaking Securitization Work for Financial Stability and Economic Growth
Shadow Financial Regulatory Committees of Asia, Australia-New Zealand, Europe, Japan, Latin America, and the United States Making Securitization Work for Financial Stability and Economic Growth Joint Statement
More informationS&P/Case Shiller index
S&P/Case Shiller index Home price index Index Jan. 2000=100, 3 month ending 240 220 200 180 160 10-metro composite 140 120 20-metro composite 100 80 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
More informationChapter 1 An Overview of Financial Management and The Financial Environment
Chapter 1 An Overview of Financial Management and The Financial Environment ANSWERS TO END-OF-CHAPTER QUESTIONS 1-1 a. A proprietorship, or sole proprietorship, is a business owned by one individual. A
More informationSaving, Investment, and the Financial System
7 Saving, Investment, and the Financial System The Financial System The financial system consists of the group of institutions in the economy that help to match one person s saving with another person
More informationFile: c02; Chapter 2: The Financial System and the Level of Interest Rates
File: c02; Chapter 2: The Financial System and the Level of Interest Rates 1. The role of the financial system is to gather money from people and businesses that have funds to invest and to channel money
More informationFinancial Markets. 1. In what ways can financial markets and instruments be grouped?
Financial Markets L E A R N I N G O B J E C T I V E 1. In what ways can financial markets and instruments be grouped? Financial markets come in a variety of flavors to accommodate the wide array of financial
More informationSecurities Lending Overview. January 25, 2007
January 25, 2007 1 Securities lending is an investment strategy in which institutional investors can generate incremental revenue from their investment portfolios by making short-term collateralized loans.
More informationUnderstanding Financial Management: A Practical Guide Guideline Answers to the Concept Check Questions
Understanding Financial Management: A Practical Guide Guideline Answers to the Concept Check Questions Chapter 10 Raising Funds and Cost of Capital Concept Check 10.1 1. What are the three primary roles
More informationChapter 1 Why Study Money, Banking, and Financial Markets?
Chapter 1 Why Study Money, Banking, and Financial Markets? MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Markets in which funds are transferred
More informationNAIC Rating Agency Working Group Hearing. September 24, Testimony of David Marks, CUNA Mutual Group
NAIC Rating Agency Working Group Hearing September 24, 2009 Testimony of David Marks, CUNA Mutual Group Good morning and thank you for the opportunity to present my views to the NAIC Rating Agency Working
More informationChapter 01. The Role of the Public Accountant in the American Economy. McGraw-Hill/Irwin
Chapter 01 The Role of the Public Accountant in the American Economy McGraw-Hill/Irwin Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Assurance services The broad range of information
More informationChapter 11:1: Saving and Investing:
Chapter 11:1: Saving and Investing: Objectives: We will examine how investing contributes to the free enterprise system. We will examine how the financial system brings together savers and borrowers. We
More informationCredit Derivatives CHAPTER 7
3 Credit Derivatives CHAPTER 7 Credit derivatives Collaterized debt obligation Credit default swap Credit spread options Credit linked notes Risks in credit derivatives Credit Derivatives A credit derivative
More informationBBM2153 Financial Markets and Institutions Prepared by Dr Khairul Anuar
BBM2153 Financial Markets and Institutions Prepared by Dr Khairul Anuar L5: The Money Markets www. notes638.wordpress.com 5-1 Apple and its $18 billion In its 2013 annual report, Apple listed $18 billion
More informationVIVALDI OPPORTUNITIES FUND PROSPECTUS
VIVALDI OPPORTUNITIES FUND PROSPECTUS September 14, 2017 The Vivaldi Opportunities Fund (the Fund ) is a Maryland corporation registered under the Investment Company Act of 1940, as amended (the Investment
More informationMGT411 Midterm Subjective Paper Solved BY SADIA ALI SADI (MBA) PLEASE PRAY FOR ME
Question No: 1(Marks: 3) Briefly discuss different types of investment grades of Long term ratings be PACRA. PACRA is the Pakistan Credit rating agency which rates different companies in Pakistan who offer
More informationChapter 11: Financial Markets Section 3
Chapter 11: Financial Markets Section 3 Objectives 1. Identify the benefits and risks of buying stocks. 2. Describe how stocks are traded. 3. Explain how stock performance is measured. 4. Describe the
More informationRelationship Among a Firm Issuing Securities, the Underwriters and the Public
Investment Companies Relationship Among a Firm Issuing Securities, the Underwriters and the Public Four Phase of IPO The objectives of the chapter are to provide an understanding of: o o o o o o The market
More informationRisk -The most important concept of investment
Investment vs. Saving How is investing different from saving? Investing means putting money to work to earn a rate of, while saving means put the money in a home safe, or a safe deposit box. Investments
More informationChapter 2. Overview of the Financial System. Chapter Preview
Chapter 2 Overview of the Financial System Chapter Preview Suppose you want to start a business manufacturing a household cleaning robot, but you have no funds. At the same time, Walter has money he wishes
More informationDepository Institutions
Economics of Financial Intermediation March 2, 2017 Historical trends Historically, Commericial banks have operated as more diversified institutions, having a large concentration of residental mortgage
More informationMcGraw-Hill/Irwin Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
14 Money, Banking, and Financial Institutions McGraw-Hill/Irwin Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Money is anything that is generally acceptable in exchange for goods,
More informationFinancial Markets Econ 173A: Mgt 183. Capital Markets & Securities
Financial Markets Econ 173A: Mgt 183 Capital Markets & Securities Financial Instruments Money Market Certificates of Deposit U.S. Treasury Bills Money Market Funds Equity Market Common Stock Preferred
More informationFAQ: Securities and Financial Markets
Question 1: What is agency relation within the context of a corporation, and what type of problems may arise as a result of such a relation? Answer 1: Agency relation is created whenever a company hires
More informationUnderstanding Fixed Income ETFs ( Exchange Traded Funds )
Please note that the following piece is for information purposes only and is not intended to constitute any investment advice, recommendation or solicitation. This is not an offer to sell any product.
More informationChapter 3. Financial Instruments, Financial Markets, and Financial Institutions
Financial Instruments, Financial Markets, and Financial Institutions Problems and Solutions 1. As the end of the month approaches, you realize that you probably will not be able to pay the next month s
More informationInternational Finance
International Finance FINA 5331 Lecture 2: U.S. Financial System William J. Crowder Ph.D. Financial Markets Financial markets are markets in which funds are transferred from people and Firms who have an
More informationMoloney Securities Asset Management, LLC Wrap Fee Program Brochure
Moloney Securities Asset Management, LLC Wrap Fee Program Brochure This wrap fee program brochure provides information about the qualifications and business practices of Moloney Securities Asset Management,
More informationTrue Diversifiers: The Case for Multi-Strategy, Multi-Manager Hedge Strategies
January 11, 2013 Topic Paper 13 March 2015 True Diversifiers: The Case for Multi-Strategy, Multi-Manager Hedge Strategies PERSPECTIVE FROM K2 ADVISORS Today s financial markets present a unique set of
More informationAppendix B: HQLA Guide Consultation Paper No Basel III: Liquidity Management
Appendix B: HQLA Guide Consultation Paper No.3 2017 Basel III: Liquidity Management [Draft] Guide on the calculation and reporting of HQLA Issued: 26 April 2017 Contents Contents Overview... 3 Consultation...
More informationCHAPTER 1 THE INVESTMENT ENVIRONMENT
CHAPTER 1 THE INVESTMENT ENVIRONMENT THE INVESTMENT ENVIRONMENT Real Assets versus Financial Assets Financial Markets and the Economy Clients of the Financial System The Investment Environment The Environment
More informationChapter 11. The Nature of Financial Intermediation. Learning Objectives. The Economics of Financial Intermediation
Chapter 11 The Nature of Financial Intermediation Learning Objectives Explain the benefits of financial intermediation and how it partially solves the adverse selection and moral hazard problems Understand
More information