MAF101 Lecture Notes - Lecture 4: Fiduciary, Australian Prudential Regulation Authority, Initial Public Offering

• School: Deakin University
• Department: Business and Law
• Course: MAF101
• Professor: John Guo

Document Summary

The financial system allows both lenders and borrowers to trade-off between the different attributes to achieve their desired portfolio structure needs. The wealth of a society is determined by the productive capacity of its economy. The capacity is a function of the real assets to be used to produce goods and. Do not contribute directly to productive capacity. Represent investors claims on real assets and income generated. Real assets generate net cash flows within the economy while financial assets define the allocations of these cash flows. These cash flows can then be repaid to investors (current cash return) or retained as a source of finance (future capital gain) Corporations acquire funds from capital markets by selling financial assets valuation. Corporations then use these funds to acquire real assets to generate cash flows. The supply of funds usually depends on how much the users will compensate the suppliers for the use of their funds.