BFB1001 Lecture Notes - Lecture 1: Weighted Arithmetic Mean, Startup Company, Capital Structure

• School: Monash University
• Department: Business - BFB
• Course: BFB1001
• Professor: Tze Choo

Document Summary

Flow of funds: where capital is transferred from surplus to de cit units in the economy. Surplus units: any entity that has more capital than what is needs. De cit units: any entity that does not have enough capital. The ef cient flow of funds: capital is not mis-priced, surplus and de cit units have liquidity, there is suf cient depth of nancial markets. An entity borrow funds directly from the nancial market without using. Nancial market through indirect third party services means ( nancial intermediaries) Advantages saves on the cost of intermediation: low risk deposits turned into higher, allows access to non-standard products not offered by risk loans and different types of loans intermediaries, larger banks are cheaper.