WGU, C708, FINANCE
Unit 2-
General:
● The primary goal is to increase shareholders equity
● Types of ownership
○ Sole proprietorship: all responsibility relays back to sole owner
○ Partnership: all responsibility relays back to dual owners
○ LLC: owners are not personally liable for debts or liabilities, must file
with state, banks and insurance companies cannot be an llc
○ Corporation: the corporator must file articles of incorporations as well
as hold an organized meeting to elect a board of directors
■ Protection of personal assets of stockholders… limitied in
liability to the amount that they invested
Financial Markets:
● Central Banks: the banks are the financial institutions for the oversight and
management of all other banks. In the US the central Bank is the Federal
Reserve Bank.
● There are 9 Major financial institutions that provide a variety of services
from mortgage loans to investment vehicles
● Credit institutions are not for profit companies (&tax exempt) that are
owned and operated by their members
● Internet Banks tend to charge their customers fewer fees than traditional
banks, and some offer less expensive services such as free online
transfers to other banks.
● There are two primary types of financial institutions- non-depository and depository
○ Insurance company: nondepository
○ Credit union: depository
● The major categories of financial institutions include
○ Central Banks
○ Retail and commercial banks
, ○ Internet banks
○ Credit unions
○ Savings and loans associations,
○ Investment banks
○ Investment companies
○ Brokerage firms
○ Insurance companies
○ Mortgage companies
● Retail and commercial bank
○ ServiceS: check and savings accounts, cds , personal and mortgage
loans, credit cards, and business banking accounts
● savings and loan associations
○ Financial institutions that are mutually held and provide no more
than 20% of total lending to businesses to fall under this category.
● Investment bank companies
○ Investment banks do not take deposits; instead they help individuals,
businesses, and governments raise capital through the issuance of
securities, investment companies more commonly known as mutual
fund companies, provide funds from individuals and institutional
investors to provide them access to the broader securities market.
● Brokerage firms:
○ Brokerage firms assist individuals and institutions in buying and
selling securities among available investors. Customers of brokerage
firms acan places trades of stocks, bonds, mutual funds, exchange
traded funds and some alternative investments
● Mortgage companies
○ Financial institutions that originate or fund mortgage loans are
mortgage companies. While most serve the individual consumer
market, some specialize in lending options for commercial real estate
● Certificate of Deposits pay more interest than standard saving accounts. Find
the highest nationally available rates for each CD term from federally insured
banks and credit unions.
, ● A financial market is an aggregate of possible buyers and sellers of financial
securities, commodities, and other fungible items, as well as the
transactions b/n them
● The term financial markets is often used to refer solely to the markets that
are used to raise finance: for long term finance, capital markets are used;
for short term finance (maturity up to one year) money markets are used
● Stock markets and bond markets are two types of capital markets that
provide financing thru the issuing of shares of stock or the issuing of bonds,
respectively.
● Derivative: a financial instrument who value depends on the valuation of
an underlying asset; such as a warrant, an option
● Capital: money and wealth; the means to acquire goods and services
● Fungible: able to be substituted for something of equal value or utility;
interchangeable, exchangeable, replaceable.
● A financial market is an aggregate of possible buyers and sellers of finacial
securities, commodities and other fungible items as well as the transaction
b/n them
● Financial Markets:
○ Long term finance: “capital markets”: stock and bond
○ Short term finance: “money markets”:
● Currency markets, enabled by foreign exchange markets, enable currency
conversion and determine relative value of world currencies.
Role of Financial Markets in Capital Allocation:
One of the main functions f financial markets is to allocate capital matching those
who have capital to those who needs it
● One of the main functions of financial markets is to allocate capital.
Capital markets especially facilitate the raising of capital while money
markets facilitate the transfer of liquidity in both cases matching those
who have capital to those who need it.
, ● Financial markets attract funds from investors and channel them t
enterprises that use that capital to finance their operations and achieve
growth from startup phases to expansion-even much later in the firm’s life.
● w/o financial markets, borrowers would have difficulty finding lenders
themselves. Intermediaries such as banks help in this process. Bank
deposits are a simple way in which capital is allocated from a pool of
savers to business that won’t deploy it.
● More
● complex transactions than a simple bank deposit require markets where
lenders and their agents can meet borrowers and their agents and where
existing instruments can be resold. One example being a stock exchange.
● Exchange: a place for conducting trading
● When a company borrows from the primary capital markets, often the
purpose is to invest in additional physical capital goods, which will be
used to help increase the income
Securities and Exchange Act of 1933
The securities act of 1933 ensures investors receive complete and accurate
information before they invest. -Primary Investors
Securities and Exchange Act of 1934
● The securities exhange act of1934 is a law governing the secondary trading
of securities, financial markets, and their participants. ESTABLISHED THE SEC
to regulate stock exchanges
Sarbanes-Oxly Act of 2002:
The Sarbanes–Oxley Act is to set new or enhanced standards for all U.S. public company
boards, management, and public accounting firms.
Management certify the accuracy of financial statements
Unit 2-
General:
● The primary goal is to increase shareholders equity
● Types of ownership
○ Sole proprietorship: all responsibility relays back to sole owner
○ Partnership: all responsibility relays back to dual owners
○ LLC: owners are not personally liable for debts or liabilities, must file
with state, banks and insurance companies cannot be an llc
○ Corporation: the corporator must file articles of incorporations as well
as hold an organized meeting to elect a board of directors
■ Protection of personal assets of stockholders… limitied in
liability to the amount that they invested
Financial Markets:
● Central Banks: the banks are the financial institutions for the oversight and
management of all other banks. In the US the central Bank is the Federal
Reserve Bank.
● There are 9 Major financial institutions that provide a variety of services
from mortgage loans to investment vehicles
● Credit institutions are not for profit companies (&tax exempt) that are
owned and operated by their members
● Internet Banks tend to charge their customers fewer fees than traditional
banks, and some offer less expensive services such as free online
transfers to other banks.
● There are two primary types of financial institutions- non-depository and depository
○ Insurance company: nondepository
○ Credit union: depository
● The major categories of financial institutions include
○ Central Banks
○ Retail and commercial banks
, ○ Internet banks
○ Credit unions
○ Savings and loans associations,
○ Investment banks
○ Investment companies
○ Brokerage firms
○ Insurance companies
○ Mortgage companies
● Retail and commercial bank
○ ServiceS: check and savings accounts, cds , personal and mortgage
loans, credit cards, and business banking accounts
● savings and loan associations
○ Financial institutions that are mutually held and provide no more
than 20% of total lending to businesses to fall under this category.
● Investment bank companies
○ Investment banks do not take deposits; instead they help individuals,
businesses, and governments raise capital through the issuance of
securities, investment companies more commonly known as mutual
fund companies, provide funds from individuals and institutional
investors to provide them access to the broader securities market.
● Brokerage firms:
○ Brokerage firms assist individuals and institutions in buying and
selling securities among available investors. Customers of brokerage
firms acan places trades of stocks, bonds, mutual funds, exchange
traded funds and some alternative investments
● Mortgage companies
○ Financial institutions that originate or fund mortgage loans are
mortgage companies. While most serve the individual consumer
market, some specialize in lending options for commercial real estate
● Certificate of Deposits pay more interest than standard saving accounts. Find
the highest nationally available rates for each CD term from federally insured
banks and credit unions.
, ● A financial market is an aggregate of possible buyers and sellers of financial
securities, commodities, and other fungible items, as well as the
transactions b/n them
● The term financial markets is often used to refer solely to the markets that
are used to raise finance: for long term finance, capital markets are used;
for short term finance (maturity up to one year) money markets are used
● Stock markets and bond markets are two types of capital markets that
provide financing thru the issuing of shares of stock or the issuing of bonds,
respectively.
● Derivative: a financial instrument who value depends on the valuation of
an underlying asset; such as a warrant, an option
● Capital: money and wealth; the means to acquire goods and services
● Fungible: able to be substituted for something of equal value or utility;
interchangeable, exchangeable, replaceable.
● A financial market is an aggregate of possible buyers and sellers of finacial
securities, commodities and other fungible items as well as the transaction
b/n them
● Financial Markets:
○ Long term finance: “capital markets”: stock and bond
○ Short term finance: “money markets”:
● Currency markets, enabled by foreign exchange markets, enable currency
conversion and determine relative value of world currencies.
Role of Financial Markets in Capital Allocation:
One of the main functions f financial markets is to allocate capital matching those
who have capital to those who needs it
● One of the main functions of financial markets is to allocate capital.
Capital markets especially facilitate the raising of capital while money
markets facilitate the transfer of liquidity in both cases matching those
who have capital to those who need it.
, ● Financial markets attract funds from investors and channel them t
enterprises that use that capital to finance their operations and achieve
growth from startup phases to expansion-even much later in the firm’s life.
● w/o financial markets, borrowers would have difficulty finding lenders
themselves. Intermediaries such as banks help in this process. Bank
deposits are a simple way in which capital is allocated from a pool of
savers to business that won’t deploy it.
● More
● complex transactions than a simple bank deposit require markets where
lenders and their agents can meet borrowers and their agents and where
existing instruments can be resold. One example being a stock exchange.
● Exchange: a place for conducting trading
● When a company borrows from the primary capital markets, often the
purpose is to invest in additional physical capital goods, which will be
used to help increase the income
Securities and Exchange Act of 1933
The securities act of 1933 ensures investors receive complete and accurate
information before they invest. -Primary Investors
Securities and Exchange Act of 1934
● The securities exhange act of1934 is a law governing the secondary trading
of securities, financial markets, and their participants. ESTABLISHED THE SEC
to regulate stock exchanges
Sarbanes-Oxly Act of 2002:
The Sarbanes–Oxley Act is to set new or enhanced standards for all U.S. public company
boards, management, and public accounting firms.
Management certify the accuracy of financial statements
