SMG FE 445 Midterm: FE445 Midterm Study Guide
Document Summary
Chapter 2. 1 asset classes and financial instruments. Real assets used to produce goods and services: e. g. , land, buildings, equipment and knowledge, owners of all real assets: households, non-profits, government, real assets determine the wealth of an economy. Financial assets claims on real assets or claims on asset income: allo(cid:449) us to (cid:373)ake the (cid:373)ost of the e(cid:272)o(cid:374)o(cid:373)(cid:455)"s real assets, all financial assets are offset by financial liabilities, three types. Fixed-income (debt) securities pay a specified cash flow over a specific period. Least closely tied to the financial condition of the issuer. Money market include short-term, highly liquid, and relatively low risk debt instruments: treasury bills short-term (mat<1yr) government securities issued at a discount from face value and returning the face amount at maturity. Can purchase directly from the treasury or on the secondary market from a government securities dealer. Income earned on t-bills is taxable at federal level, but exempt from all state and local taxes.
