UGBA 10 Lecture Notes - Lecture 1: Financial Statement Analysis, S&P 500 Index, Dow Jones Industrial Average
23 May 2018
School
Course
Professor
Finance and Accounting January 22
I. Financial literacy
• Being able to read, discuss, and understand money pertaining to finance
• Why do you want it? For your own well-being, take decisions on your own finances that
try to maximize your opportunities
o Sensible attitude to investments
o Suitable use of debt (good debt= mortgage; bad debt=credit card)
• Participate in conversations
o Understand business and government activities in the media
o Cofroted ith topis ith frieds ad fail; there’s o tetook about
making your own financial decisions
• A financially literate person: someone that has the knowledge to take effective action to
fulfill a idiidual’s persoal, fail, ouit, ad gloal goals ifored oserer,
voter).
II. Economics around the dinner table
• Economic GDP growth (2%), Unemployment rates
• Inflation rates: want a little bit, but not too much.
• Bond rates: how much it is for the government to borrow money for 10 years (ie:
mortgages are tied to government).
• Equity market averages are important but should not be overemphasized (~13%)
III. Equity market averages
• Dow 30: most discussed
• S&P 500: most broad
• NASDAQ: emphasizing tech companies
• Equity prices are a function of:
o Expected future earning and cash flows
o Traders’ pereptio of risks in the market
IV. Going beyond the averages
• You a look uder the hood of idiidual opaies usig our koledge of
accounting, finance, and financial statement analysis
• Do’t forget the det arkets
o They have an outsize effect on some industries such as real estate (ie: natural
gas incurred the most debt).
V. Economics Terminology in Chapter 1
• Ease of setting up businesses contributed to US prosperity
o US economy has exhibited 3-4% annual growth rate, which is good for a
developed economy.
find more resources at oneclass.com
find more resources at oneclass.com
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UGBA 10 Full Course Notes
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