Exam (elaborations)
FIN 3100 Exam #1 Review v3 2025 Kennesaw State University
- Course
- FIN 3100
- Institution
- Kennesaw State University
FIN 3100 Exam #1 Review v3 2025 Kennesaw State University
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FIN 3100 Exam #1 Review v3 2025 Kennesaw State UniversityFIN 3100
Chapter 1 – Financial Management
• Cycle of money: The movement of money from lender to borrower
and back again
• Financial intermediary: An institution that acts as a middleman
between
borrowers and lenders; borrower makes payments to the bank,
which then pays back the lender
• Financial management: Includes many activities that create or
preserve the economic value of the assets of an individual, small
business, or corporation
• Finance: Helps people and businesses make decisions about when to
buy and
when to sell and about what to buy and what to sell
• Corporate finance: The set of financial activities that support the
operations of a corporation or business, its use of money, and those
decisions that affect the wealth of the owners
• Investments: The activities centering on the buying and selling of
assets, both real and financial
• Real assets: Physical assets such as property, buildings, and
commodities,
including corn, oil, and gold
• Financial assets: Intangible assets such as stocks and bonds
• Financial institutions and markets: Organized financial
intermediaries and the forums that promote the cycle of money;
institutions take the form of commercial banks, investment banks,
insurance companies, pension companies, and foreign exchanges
• International finance: Deals with the addition of multinational
aspects of the finance activities outlined previously
• Equity markets: Where stocks are bought and sold
• Debt markets: Where bonds are bought and sold
• Derivatives markets: Where future contracts on commodities are
bought and sold (futures markets) or where options on equities,
futures, or currencies are bought and sold (options markets)
• Foreign exchange markets: Where currencies are bought and sold
• Money markets: Where investors buy and sell financial assets
that will mature within the year
• Maturity: The length of time the borrower has to pay back the
borrowed
, funds
• Capital markets: Financial assets that maturities over a year
• Primary (first) markets: Where the sale takes place when a company
offers stock for sale for the first time and the proceeds of the sale go
to the company
• Secondary market: Where the sale takes place when the initial buyer
of the
stock or bond may choose to resell the asset to another party after
the initial public sale of stocks or bonds have taken place
• Dealer market: An individual buying and selling securities does so
out of his or her own inventory; example is an used car dealership
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