All rights reserved McGraw-Hill/Irwin Why Finance Matters The Flow of Savings to Corporations Functions of Financial Markets Functions of Financial Intermediaries Value Maximization
Trang 1Finance
Fifth Edition
Slides by Matthew Will
McGraw-Hill/Irwin
Financial Markets and
Institutions
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McGraw-Hill/Irwin
Why Finance Matters
The Flow of Savings to Corporations
Functions of Financial Markets
Functions of Financial Intermediaries
Value Maximization and Cost of Capital
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McGraw-Hill/Irwin
Primary Markets
Secondary Markets
OTC Markets
Money
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McGraw-Hill/Irwin
Financing Decision
Source of Funds “Capital”
Capital Structure
Money Markets
Euros
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McGraw-Hill/Irwin
Financial Manager
Firm's
operations
Investors
(1) Investors buy shares with cash
(1)
(2)Cash is invested
(2)
(3) Timber harvest generates cash
(3)
(4a) Cash reinvested
(4a)
(4b) Cash returned to investors
(4b)
Real assets
(timberland)
(stockholders save and invest
in closely held firm.)
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Irwin/McGraw-Hill
Company
Issue Debt
Cash Investors
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Irwin/McGraw-Hill
Bank of America
Bank of America
Windsor Fund
Windsor Fund Investors Investors
Sells shares
Issues shares
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McGraw-Hill/Irwin
Irwin/McGraw-Hill
Funds
Funds
Banks Insurance Cos.
Brokerage Firms
Obligations
Depositors Policyholders
Investors
Obligations
Company
Intermediary
Investor
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McGraw-Hill/Irwin
Irwin/McGraw-Hill
Banks
Depositors
$2.5 mil
Cash
Loan
Deposits
Company
Intermediary
Investor
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McGraw-Hill/Irwin
Irwin/McGraw-Hill
Insurance Company
Policyholders
$250 mil
Cash
Loan
Sell policies Issue Stock
Company
Intermediary
Investor
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McGraw-Hill/Irwin
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McGraw-Hill/Irwin
% Holdings of Corporate Equities (Qtr 1, 2005)
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Transporting cash across time
Risk transfer and diversification
Liquidity
Payment mechanism
Provide information
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Information Provided by Financial Markets
Commodity prices
Interest rates
Company values
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Data as of April, 2005
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McGraw-Hill/Irwin