FIN 4504 Lecture Notes - Lecture 6: Ask Price, Mutual Fund Fees And Expenses, Financial Statement

• School: University of Florida
• Department: Finance, Insurance and Real Estate
• Course: FIN 4504
• Professor: Li Qing

Document Summary

Examples include property, plant & equipment, human capital, piece of paper, computer, patent, and mba degree. When all balance sheets are aggregated in the economy, only real assets remain. > net wealth of economy: sum of real assets. > claims on real assets or claims on real-asset income and can"t exist without real assets. May be more liquid because they are traded in well-functioning markets. All financial assets are offset by a financial liability. > informational role: stock prices can reflect firm"s capitalization decisions. > consumption timing: store your salary in investment tools for retirement. > risk allocation: bonds- risk adverse; stock- risky. > separation of ownership & management: management- increase shareholder profit through professional decisions; owner- bear risk. > corporate governance: internal board of directors to protect benefits of shareholder & their compensation; external company may get acquired/ bought out and management is replaced. > asset allocation: choice among broad asset classes (bonds/stocks)