[FINC314] - Midterm Exam Guide - Comprehensive Notes for the exam (62 pages long!)

• School: University of Delaware
• Department: Finance
• Course: FINC314
• Professor: Danby Peter

Document Summary

In this first exploratory note of the evening and of the course, we examine the following: the fundamentals of financial markets (purpose, definitions, benefits, etc. ), the basics of financial institutions (purpose, definitions, benefits, etc. ), and the importance of markets when it comes to the critical issue of resource allocation. This exploratory note and the one which follows a little bit later have been adapted from a lecture that i gave in finc855 financial markets and institutions a year or so ago. General overview of the investment environment - financial markets. A critical definition: financial markets are structures or mechanisms of exchange through which funds flow from those with a surplus (suppliers of funds) to those with a deficit (users of funds). There are four pri(cid:373)ar(cid:455) (cid:373)arket (cid:272)lassifi(cid:272)atio(cid:374)s (other ta(cid:454)o(cid:374)o(cid:373)ies are possi(cid:271)le, (cid:271)ut the te(cid:454)t(cid:271)ook"s is reasonable): Definition securities that have original maturities of less than a year, low risks, and low return securities.