Summary FIN 3312 - Texas State University - Exam1

FIN 3312 - Texas State University - Exam1




Where you get your money
Purpose: Getting money
Financial Markets
from savers to users getting
money where it needs to go
putting money to its highest use
Real Assets Generate Cash Flow
Financial Assets Allocate Cash Flows (securities)

, Primar
y
Secon
dary
Types of Markets
Money
Capital
Spot
Future
s
Public
Private
-Primary: Issuer gets $ offered by issuer
primary vs secondary -Secondary: Trade between
markets investors, Issuer gets no $ Secondary
market > Primary Market
-short term vs. long terms
Money vs. Capital
-stocks and bonds
Spot vs. Futures obligation now vs. obligation in the future
Public vs. Private anyone vs. limited
Risk and Return more risk = more return
Cash Flow vs.
Value($) vs. Numbers(#)
Income Market
Value vs. Book
Value
= Debt + Equity
Assets (Stuff firm owns)
(Debt+Equity -> How firm pays for financial Structure)
Time value of money Money now vs. Money Tomorrow
Value of an Asset Present Value of expected future Cash Flow's (CF's)
Maximize the value of the firm
-Value is all-encompassing
Goal of the Firm -Value is forward looking
-Link to Owner
-Value is determined by society
"Agents" Managers that Owners(firm) Hire
Agency Problem Managers that don't maximize value of the firm
Payment to organizational members in the form of shares in the
stock-based compensation
corporation.
-method of controlling managers
Owners and Managers are _.
Separate -different people
-managers don't bear full cost of decisions and Vice Versa
A financial statement that reports assets, liabilities, and