Class Notes (974,141)
CA (573,764)
UOIT (1,982)
BUSI (226)
BUSI 3410U (20)
Bin Chang (14)
Lecture 1

BUSI 3410U Lecture 1: Lecture 1

by OneClass174234 , Winter 2013
4 Pages
47 Views
Winter 2013

School
UOIT
Department
Business
Course Code
BUSI 3410U
Professor
Bin Chang
Lecture
1

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Real Vs. Financial Assets
- Debt on the balance sheet refer to debt securities; according to StatsCan
- Real Assets
o Tangible things
Housing→ residential structures
Consumer durables: Washing machines, cars, Tvs, etc
Offices and factories : Non-residential structures
Lathes, tractors: machinery and equipment
Land
o Intangible Things→ patents, processes; which are underestimated on the balance sheet
o Consumer items plus real investments to produce gods
- Wealth of the world is increased with economic growth
o distributed with welfare policies and appropriate income distribution
The Financial System
- borrowing and lending→ use of money and the source of money
o Household sector→ major interest: consumers
Personal Finance: Predominantly lends
o Business Sector→ Intermediate producer: Real investment
Business Finance: Predominantly borrows
o Government Sector
Public goods → education, health and welfare (HEW): provincial
Defence and trade: Federal
Gov’t Finance: predominantly Borrows
o Foreign Sector
International Finance: mixed
o when household is positive; saves/ lenders
o gov’t/ businesses/ foreigners are net borrowers
- Financial Markets
o Financial Assets→ security under which funds are lent; a “claim”
Debt contractual obligation where rights are determined under contract law
Equity → ownership claim (share) on the residual income(profits) of an
enterprise rights determined under securities and corporate law
o Finance is based on:
Law→ the specific rights attached to a security
Accounting→ understanding the information flow
Economics→ understanding individual and corporate behaviour
- The borrower needs help to find suitable lenders, which is what market intermediaries (IPOs)
do.
- Market Intermediaries (IPO) ; where money flow between company and investors ; tsx is
where investment bankers are involves
- Financial Intermediaries (Bank) ; bookstore TD Investors ; investors have no direct
relation with bookstore
Direct non- market Transactions
- Problems of Direct Non-Market Intermediation; Non-market = no others are involved
1. Search Costs → How do you find someone to lend money to?
2. Double co-incidence of wants→ DO they want to borrow exactly what you want to
lend?
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Description
Real Vs. Financial Assets Debt on the balance sheet refer to debt securities; according to StatsCan Real Assets o Tangible things Housing residential structures Consumer durables: Washing machines, cars, Tvs, etc Offices and factories : Nonresidential structures Lathes, tractors: machinery and equipment Land o Intangible Things patents, processes; which are underestimated on the balance sheet o Consumer items plus real investments to produce gods Wealth of the world is increased with economic growth o distributed with welfare policies and appropriate income distribution The Financial System borrowing and lending use of money and the source of money o Household sector major interest: consumers Personal Finance: Predominantly lends o Business Sector Intermediate producer: Real investment Business Finance: Predominantly borrows o Government Sector Public goods education, health and welfare (HEW): provincial Defence and trade: Federal Govt Finance: predominantly Borrows o Foreign Sector International Finance: mixed o when household is positive; saves lenders o govt businesses foreigners are net borrowers Financial Markets o Financial Assets security under which funds are lent; a claim Debt contractual obligation where rights are determined under contract law Equity ownership claim (share) on the residual income(profits) of an enterprise rights determined under securities and corporate law o Finance is based on: Law the specific rights attached to a security Accounting understanding the information flow Economics understanding individual and corporate behaviour The borrower needs help to find suitable lenders, which is what market intermediaries (IPOs) do. Market Intermediaries (IPO) ; where money flow between company and investors ; tsx is where investment bankers are involves Financial Intermediaries (Bank) ; bookstore TD Investors ; investors have no direct relation with bookstore Direct non market Transactions Problems of Direct NonMarket Intermediation; Nonmarket = no others are involved 1. Search Costs How do you find someone to lend money to? 2. Double coincidence of wants DO they want to borrow exactly what you want to lend?
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