FINA 469 Midterm: Exam 1 Study Guide
14 Feb 2017
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Investment: the use of a current asset in pursuit of greater future assets. 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. Come up with asset allocation: what % of assets go into various asset classes i. Strategies include looking at growth, value, distressed (deep value), dividend paying. Can be categorized by maturity, credit quality, geography, structure (when cash flows occur, who receives them)
