FINA 469 Lecture Notes - Lecture 1: Behavioral Economics, Mutual Fund, Current Asset
15 Jan 2017
Department
Course
Professor
Document Summary
Investment: the use of a current asset in pursuit of greater future assets. Behavioral finance example: you have set aside for thursday night: dinner and 5 points with friends. Would you be willing to give 50$ to a friend to receive. Financial assets: ownership portions of real assets/claim on income derived from real assets. Bank deposits, shares of stock, bonds, shares of mutual funds, derivative securities, equity shares of stock. Derivatives: derive value from underlying or reference asset. Equity and bonds have an asset side and liability side. Provide information about value/status of companies, nations, states, cities, and other viable economic entities. Nations: currency exchange rate, treasury bonds can indicate status. Allow for separation of ownership of companies and management. Investors buy shares, shareholders elect board of directors, board hires and oversees management, management works to maximize shareholder value. Investment process: come up with asset allocation: what % of assets go into various asset classes.
