FIN 201 Chapter Notes - Chapter 2-5: Operating Margin, Transaction Account, Inventory Turnover
Document Summary
The capital allocation process: direct transfers a. i. Intermediary obtain funds from savers in exchange for its securities: diversification is the main advantage of financial intermediary. Types of markets: physical vs. financial, physical asset markets a. i. Also called tangible asset market are for products that physically exist: financial asset markets b. i. Deal with stocks, bonds, notes and mortgages b. ii. They also deal with derivative securities, whose values are derived from changes in the prices of other assets: spot vs. futures, spot market a. i. Markets in which assets are bought or sold for the on-the-spot delivery a. ii. Very fast service that occurs within few days: futures markets b. i. Markets in which participants agree today to buy or sell an asset at some future date: money vs. capital, money markets a. i. The markets for short term, highly liquid debt securities a. ii. New york, london, tokyo money markets are the largest in the world: capital markets b. i.
