FIN 300- Midterm Exam Guide - Comprehensive Notes for the exam ( 19 pages long!)
Document Summary
Financial markets: primary markets, the firm issues debt or equity securities to investors and receive cash in return, secondary markets. Investors trade securities between themselves; the firm is not involved: benefit the firm by, providing liquidity to investors, which makes issued securities more attractive, setting benchmark prices for future stick/debt offering. Financial institutions: provide financial services to individuals such as taking deposits, managing investments, brokering financial transactions or making loans, the main types of financial institutions are, banks and credit unions. Insurance companies: mutual funds, pension funds, hedge funds, venture capital funds, private equity funds. Balance sheet: accounting identity: assets = liabilities + equity, traditionally, assets are shown at book value: historical cost adjusted for depreciation. Securities: net working capital, measures ability to meet cash obligation over the next 12 months, net working capital = current assets current liabilities, usually positive in a healthy firm.
