Foundations of ENTR Final Flashcards
Transfer funds from savers to borrowers
Disperse money from saving ppl to ppl who need to borrow
Financial Markets
Financial intermediaries that obtain funds by accepting checking and savings deposits and then lending those funds to borrowers
Banks, allow you to open savings to disperse to other ppl
Depository institutions:
3 Depository institutions:
Commercial banks
Credit unions:
Savings and loan associations:
Owned by its depositors
Credit unions:
Obtain funds by accepting savings account deposits used to make mortgage loans
Primarily used for mortgages
Savings and loan associations:
Institutional Investors
Securities Brokers
Securities Dealers
Investment Banks
Nondepository Financial Institutions
Amass financial capital and use it to acquire a portfolio of different assets
Institutional investors
Act as agents for investors who want to buy and sell financial securities
agents who make the connections, so they can make the deals. They make a commission on deals they make
Securities brokers
Participate directly in securities markets, buying and selling stocks for their own accounts
buying and selling on their own
Securities dealers
Specialize in helping firms raise financial capital by issuing securities in primary markets
goal to help borrowers raise financial capital; finding private purchasers
Investment banks
Established the Federal Reserve System as the central bank of the United States
Federal Reserve Act of 1913
Established Federal Deposit Insurance Corporation to insure bank deposits
Prohibited commercial banks from selling insurance or performing the functions of investment banks
insure deposits, established fdic
Banking Act of 1933
Required firms issuing new stocks in a public offering to file a registration statement with the Securities Exchange Commission (SEC)
make sure filing is accurate and know
Securities Act of 1933
Don’t go through this, not on final
Established the Securities and Exchange Commission to regulate and oversee the securities industry
Securities Exchange Act of 1934
know what this is- if auditing an accountant, can not have a conflict of interest byt providing other services for you. AKA you are not connected through accountat
Ensured that external auditors offered fair, unbiased opinions when they examined a company’s financial statements
Sarbanes-Oxley Act, 2002
Not as important
Overturned the section of the Banking Act of 1933 that prohibited commercial banks from selling insurance or performing the functions of investment banks
Financial Services Modernization Act of 1999
KNOW
- Gave govt more authority over non banking institutions
Expanded the Fed’s regulatory authority over nondepository financial institutions
Dodd-Frank Act of 2010
Common Stock Preffered Stock Bond Convertible Securities Mutual Fund Exchange Traded Fund (ETF)
Types of Securities
if firm goes bankrupt, they get money back before common stock, need to pay them first anyways for dividends
Gives its holder preference over common stockholders in terms of dividends and claims on assets
Preferred stock
Basic form of ownership in a corporation
last on list
Common stock
Formal debt instrument issued by a corporation or government entity
Bond
Bond or share of preferred stock that gives its holder the right to exchange it for a stated number of shares of common stock
shared of preffered stocks that u can exchange to common stock
Convertible securities
Institutional investor that raises funds by selling shares to investors and uses the accumulated funds to buy a portfolio of many different securities
invest in a more diverse portfolio, mixes up all securities and slices them to share stocks from x firms
Mutual fund
Shares traded on securities markets that represent the legal right of ownership over part of a basket of individual stock certificates or securities
market basket of individual stock securities, different types
Exchange-traded fund (ETF)
Basic Rights of Common Stock
Voting rights - Right to dividends - Capital gains: Preemptive right - Right to a residual claim on assets
Right to vote on important issues in the annual stockholders’ meeting
Voting rights -
- Distribution of earnings to the corporation’s stockholders
They get dividends if earner
Right to dividends
Return on investment received if the price of the stock rises above the amount paid for it
if stock rises higher than paid for, taxable, get money
Capital gains:
Right to purchase new shares in proportion to existing holdings
u have 1st dibs to purchase new stock if adding more in proportion
Preemptive right
Assets Prolly not gonna get any tho
Right to a residual claim on assets
Maturity Date
Par Value
Coupon Rate
Current Yield
Features of Bonds
Date when a bond will come due
Maturity date:
Value of a bond that the issuer promises to pay the bondholder when the bond matures
what they pay u when bond matures
If u sell bond early, u can sell at premium or loss
Par value:
Interest paid on a bond
Expressed as a percentage of the par value
Coupon rate
Amount of interest earned
Expressed as a percentage of the bond’s current market price
Current yield:
Bonds can be sold to other investors before maturity, but the price received _____ correspond to the bond’s par value
might not
Bond higher than par value- premium, if not, discount
When the market price is above the par value
Premium -
When the market price is below the par value
Discount -
Market in which newly issued securities are traded
Primary Securities Market
New securities are offered to any investors who are willing and able to purchase them
Anyone who has resources can buy stock
Public offering:
Negotiated between the issuing corporation and a small group of accredited investors
investment bank identifies accredited investors, only to x ppl
Private placement:
Previously issued securities are traded
Any stock sold b4 1st one does not make firm money
Secondary Securities Market
Organized venue for trading stocks and securities that meet listing requirements
Stock (securities) exchange:
Securities that are listed on exchanges are traded
Over-the-counter market (OTC):
Automated, computerized securities trading system that automatically matches buyers and sellers
computerized system, tinder for stocks
Electronic communications networks (ECN):
Members of the general public cannot directly trade stocks and other securities
Enlist the services of a brokerage firm to carry out their trades
Personal Investing
Person who makes connection to sell stocks
brokers
Provide a wide range of services in addition to carrying out trades
Full-service brokers -
Provide basic services needed to buy and sell securities but offer fewer additional services
no personal transaction
Discount brokers
Market & Limit Orders
Types of Orders When Buying and Selling Securities
Tell brokers to buy or sell a specific security at the best currently available price
Market orders
Tell brokers to buy a specific stock only if its price is below a certain level, or to sell a specific stock only if its price is above a certain level
Limit orders
Investing for income Market timing Investing for growth Value Investing Buying & Holding Stock
Strategies for Investing in Securities
Buying bonds and stocks to generate a steady income
Investing for income -
Investing by analyzing when prices of specific stocks are likely to rise and fall
guess when the stock is gonna be as low as possible, and sell when as high as possible
Market timing
Investing in companies that have the potential to grow much faster than average for a sustained time
Investing for growth
Investing in stocks that are undervalued in the market
believe that you have knowledge others don’t
Value investing
Purchasing a diversified set of securities and holding them for a long period of time
Buying and holding stocks
Stock index statistics that track how the prices of specific sets of stocks have changed
Stock Indices
Tracks stock prices of 30 large, well-known U.S. corporations
Looks at 30 big strong performing firms
Dow Jones Industrial Average (DJIA)
Based on prices of 500 major U.S. corporations in a variety of industries and market sectors
500 major corps
Standard & Poor’s 500
Organizational function and a set of processes
Create, communicate, and deliver value to customers
Manage customer relationships in ways that benefit the organization and its stakeholders
Create long term value for organization
Marketing:
Ability of goods and services to satisfy wants
Utility:
Form
Time
Place
Ownership
Utility types
Satisfies wants by converting inputs into a finished form
the form the product is in, good use of product, makes u feel good
liquid hand soap, audio book (CD, Mp3)
Form utility:
Satisfies wants by providing goods and services at a convenient time for customers
Amazon Prime, audio books, Video on Demand, 24 hour Hy-Vee
Time utility
Satisfies wants by providing goods and services at a convenient place for customers
Redbox, audio books (accessible via phone in car), car DVD players for kids on long drive
Place Utility
Satisfies wants by smoothly transferring ownership of goods and services from seller to buyer
iTunes, Audible.com, vehicle financing, brokers
Ownership Utility
People
Place
Event
Idea
Types of Marketing
Used by people in the field of sports, politics, and art
Sports stars, YouTubers,
People marketing
Used to draw people to a particular place
Place marketing
Used for athletic, cultural, or charitable events
about 1 event
Event marketing
Used to change how people think or act
stay safe, philosophies
Used to change how people think or act
Changed as the ratio of products to consumers shifted.
Relationship- long term customer value
Production- making enough
Evolution of Marketing
Ongoing process of acquiring, maintaining, and growing profitable customer relationships by delivering unmatched value
Customer Relationship Management (CRM)
Felt by customers when they perceive that a good or service delivers value above and beyond their expectations
Customer satisfaction
Customers buy a product from the same supplier again and again
Customer loyalty
Formal document that defines marketing objectives and the specific strategies for achieving those objectives
Planning involves deciding where to target those objectives and evolving strategies through market segmentation
Marketing Plan
Dividing potential customers into groups of similar people, or segments
Market segmentation
Group of people who are most likely to buy a particular product
Target Market
Target Market Characteristics
Size
Profitability
Accessibility
Limited competition
Consumer Market Segmentation
Demographic
Geographic
Psychographic
Behavioral
Dividing the market based on characteristics about people such as age, income, ethnicity, and gender
Demographic
Dividing the market based on where consumers live
Geographic
Dividing the market based on consumer attitudes, interests, values, and lifestyles
Psychographic
Dividing the market based on how people behave toward various products
Behavioral
Direct their efforts toward people who are buying products for personal consumption
People
Consumer marketers (B2C)
Direct their efforts toward people who are buying products to use either directly or indirectly to produce other products
Business marketers (B2B)
Categories of Business Segmentation
Geographic
Customer-Based
Product use based
Marketing Mix
Know this!
Blend of marketing strategies for: Product Price Distribution Promotion
Firm evaluates its marketing mix when it enters foreign markets
Global marketing mix -
Elements That Influence the Consumer Decision-Making Process
Cultural
Social
Personal
Psychological
Elements That Affect the External Marketing Environment
Competitive Economic Social/ Cultural Technological Political/ Legal
Begins with analysis of the market share
Competitive -
Involves identifying and responding to changes as soon as possible
Economic
Includes lifestyle, customs, language, attitudes, interests, and population shifts
Social or cultural
Affects marketers in ways that are less directly visible
Technological
Includes laws, regulations, and political climate
Political or legal
People’s actions when they are buying, using, and discarding goods and services for their personal consumption
Consumer Behavior
Consumer discomfort with a purchase decision, typically for a higher-priced item
Cognitive dissonance
Process of gathering, interpreting, and applying information
To uncover opportunities and challenges, and to make better decisions
Marketing Research
ex: your own surveys, focus groups, customer comments, mall interviews
Existing data that marketers gather or purchase for a research project
Secondary data
ex: Census, Wall street journal, time magazine, product sales history
New data that marketers compile for a specific research project
Primary data
Primary Research types
Observation & Survey
Does not require the researcher to interact with the research subject
Observation
Requires that the researcher interact with the research subject
Survey
Development and promotion of products with ecological benefits
Green marketing
Creation of products tailored for individual consumers on a mass basis
Mass customization
Anything that an organization offers to satisfy consumer needs and wants
Something they want
Product
Product by any other name
Service
Qualities of a Service
Intangibility
- Can't touch
Inseparability
- Cab't be separated from practitioner
Variability
-Difference btwn 2 ppl with skills
Perishability
- Can't keep in a stockpileProducts that do not include any service
Pure goods
Products that do not include any goods
Pure services
Layers of a Product
Core Benefit
Actual Product
Augmented Product
Consumers buy a core benefit that satisfies their needs
Why they’re buying it
Core benefit
Physical good or the delivered service that provides the core benefit
What it is
Actual product
Additional goods and services provided with the actual product that sharpen their competitive edge
Augmented Product
Purchased for personal use or consumption
Consumer Products
Inexpensive goods and services that consumers buy frequently with limited consideration and analysis
don’t think a lot, buy frequently, not a lot of thought
Convenience products
More expensive products that consumers buy less frequently
Shopping products
Much more expensive products that consumers seldom purchase
Specialty products
Goods and services that hold little interest or even negative interest for consumers
Unsought products
Purchased to use either directly or indirectly in the production of other products
formal process/ checklist u go through when shopping
Used to make product
Or inderrict
Components are not expected to be sold but also not broken down enough to be raw materials (kinda put together)
Business Products
ex:Installations Accessory equipment Maintenance, repair, and operating products Raw materials Component parts and processed materials Business services
Attributes that make a good or service different from other products that compete to meet the same or similar customer needs
Product Differentiation
Could be at a high quality level but need to be willing to pay for that
Fast food- best food at X amount of price, consistent
Measures how well a product performs its core functions
Quality level
