FIN 3311 Lecture Notes - Lecture 12: Financial Instrument, Fixed Income, Retained Earnings

• School: St. John's University
• Department: FIN - FINANCE
• Course: FIN 3311
• Professor: Thomas Anderer

Document Summary

They need to raise money to finance the current operations and future growth of their companies. To do so they must market the future cash flows of their firm. Marketing entails the packaging of cash flows in order to fetch the highest price possible. Companies do not face major constraints when choosing financial instruments. On the merits of security, although some states do have. Instruments must appeal to investors and meet the needs of the company. merit regulation (blue sky laws) Sec regulations require adequate disclosure before purchase. When designing a financial instrument, a financial executive works with three variables: investors" claims on future cash flows, investors" right to participate in company decisions, investors" claims on company assets in the event of liquidation. Promise interest income and repayment of principal at maturity. Bonds are sold to the public in small increments, such as ,000 and can be traded on an exchange after issue.