Introduction to Financial Markets
[08/09-11/2022]
Finance - the study of how individuals, institutions, governments, & businesses acquire, spend,
& manage money and other financial assets
both an art and a science
a social science, under the big umbrella of economics
AN ART - creatively think of ways how to manage money
no one way to apply theories will depend on the situation, and on the circumstances,
behavioral aspect, behavioral science, the study of the movements of the surroundings
We deal with finances in our daily lives.
Why Study Finance?
To make informed investment decisions
To determine good financing sources.
We need to know tools & techniques to maximize returns and minimize risks.
Finance versus Economics and Accounting
Finance grew out of economics and accounting
Economists developed the notion that an asset’s value is based
Areas of Finance (check ate Kyle’s files)
1. Financial Management - heavy on trying to situate oneself in a corporate set-up
2. Capital Markets and Institutions [focus of the class] 3. Investments - there is a prerequisite
Areas on Application
1. Corporate Finance - application of finance tools in investing and financing decisions in
an institutional setting.
Introduction to Financial Markets
1
2. Personal Finance - application of finance tools in the management of individual and
family resources. (my personal fund management decisions)
3. Public Finance - application in finance tools for the effective allocation of public funds
for government services, public investment, and public debt.
Areas of Career Path
1. Financial Management
concerned with the administration of financial affairs of the business, which
includes tasks such as developing financial plans, ….
target is to increase the value of the company
2. Financial Services target is to
Negative returns -
Agree or Disagree?
1. Your P5 today may still buy the same thing 5 years hence. - disagree
2. Consumption through cash is best when belayed or, if possible, stretched. - agree
3. The higher the risk, the higher the return. - agree
4. Investors are generally risk-takers. - disagree
5. Cash is more important than profit. - agree
6. Profit may not necessarily result in cash flows. - agree
7. Stock price volatility is dependent on the volume of shares supplied and demanded in the
market. - disagree
8. The faster the movement of stock transactions in the market, the better. agree - shows that
an entity/entity’s product is becoming popular or smth shows that company has a high
value
9. People always put their interest first before that of the others. - agree
Introduction to Financial Markets
2
10. To make an employee act for the best interest of the owners of a business, make him/her an
owner too. - disagree
Introduction to Financial Markets
3