FIN 311 Lecture 4: Day 4
Document Summary
Markets: the direct nance path, investors transfer funds to rms or governments, three legs of markets. Quick de nitional dichotomies: real v nancial assets. Real: tangible, something you can touch, nor really our scope, real estate, metals, collectables. Nancial: intangible, claims on real assets, something you cant touch, stock, bonds, derivatives: primary v secondary. Primary: new, rst tim on market, new cars, houses, cash ow goes from investors to issuers. Secondary: used, after rst time its been on market, used cars, houses, cash ow from investor to investor, issuer gets no direct bene t: debt v equity. Debt: no ownership, creditor debtor relationship, discrete period of time, usually lower risk, lower return. Equity: ownership, shareholder, no xed period of time, usually higher risk, higher return: money markets v capital. Money: whiter govts big bus can borrow money and lend money to eachother, all debt, short term, very low risk, low return, exceptionally boring, banks and not us directly.
