Lecture Two Flashcards
what is the hierarchy for the financial manager
chef financial officer on top
treasurer and controller equally underneath
who is the chef financial officer
responsible for financial policy and corporate planning
-is the top person in charge of a company’s money. They make big decisions about spending, saving, and growing the business financially
what does the CFO stand for
Chef financial officer
who is the treasurer
person in a company who manages its cash, investments/banking relationships, and financial risks.
They focus on making sure the company has enough money to run smoothly and grow.
who is the financial controller
is the person who manages a company’s accounting and financial records and taxes.
They make sure all money-related reports are correct and follow the rules
what is the goal of the corporation that most can agree on
maximise the current market value of the firm
-wealth maximisation
what is the issuing financial assets
financial claims to income generated by the firm
-they can raise funds they need to grow with when go to financial markets
direct flow of savings to corporations
happens when people or businesses invest their money directly into a company instead of going through banks or other intermediaries.
-investors directly to corporations
indirect flow of savings to corporations
happens when people save money in banks or financial institutions, which then lend or invest that money in businesses.
what is the financial market in terms of flow of savings to corporations
markets where securities are issued and traded
what are the three markets in the financial markets
-Primary markets
-secondary markets
-otc markets
what is the primary market in terms of flow of savings to corporations
market for sale of new securities by key corporations
- sell new stocks or bonds for the first time to raise money.
-first sale
what is the secondary market in terms of flow of savings to corporations
market in which previously issued securities are traded among investors
-resale
what is the OTC market in terms of flow of savings to corporations
market where stocks and bonds are traded directly between buyers and sellers, without a central exchange
- Buying directly without using a big stock exchange.
three classes of investment markets
fixed income market, capital market, money market
what is the fixed income market
-market for fixed coupon debt securities
e.g. government bonds
what is the capital market
market for long term financing
what is the money market
market for short term financing
-e.g. for less then a year (short term)
what is the financial intermediary
an organisation that raises money from investors & provides financing for individuals, companies and other organisations
financial intermediaries from companies to investors
large companies sell shares, -> the mutual or hedge fund -> issue shares to investors
financial intermediaries from investors to large companies
investors issue shares to hedge fund -> sell shares to large companies
what is a mutual fund
investment firm that gathers savings of various investors
to create diversified portfolio of securities- involving lower risk & low returns = they have strict regulations
-A shared investment pool managed by professionals
what is a pension fund
fund established by employer aimed at supporting employees during retirement
-Money saved for workers’ retirement
what is a hedge fund
private investment available to institutional investors which operate
under minimal regulation = can engage in more speculative strategies compared to mutual funds
-A high-risk, high-reward investment strategy for the wealthy
