財(cái)務(wù)管理基礎(chǔ)培訓(xùn) 課件

FoundationsofFinancialManagementFoundationsofFinancialManagPart1IntroductionChapter1TheGoalsAndFunctionsofFinancialManagement2Part1IntroductionChapterSummaryThischaptertracestheevolutionandinterrelationshipsoffinanceasafieldofstudyandtheroleofthefinancialmanagerinadynamiceconomy.3SummaryThischaptertracesthLearningObjectives1.Thefieldoffinanceintegratesconceptsfromeconomics,accounting,andanumberofotherareas.2.Therelationshipofrisktoreturnisacentralfocusoffinance.3.Theprimarygoaloffinancialmanagersistomaximizethewealthoftheshareholders.4LearningObjectives1.ThefieLearningObjectives4.Financialmanagersattempttoachievewealthmaximizationthroughdailyactivitiessuchascreditandinventorymanagementandthroughlonger-termdecisionsrelatedtoraisingfunds.5LearningObjectives4.FinanciLearningObjectives5.Financialmanagersmustcarefullyconsiderdomesticandinternationalbusinessconditionsincarryingouttheirresponsibilities.6.Dailypricechangesinthefinancialmarketsprovidefeedbackaboutacompany’sperformanceandhelpinvestorsallocatetheircapitalbetweenfirms.6LearningObjectives5.Financia1.ThefieldofFinance.A.Thefieldoffinanceiscloselyrelatedtoeconomicsandaccounting.1.Economicsprovidesastructurefordecision-makinginsuchareasas:a.Riskanalysis.b.Pricetheory.c.Comparativereturnanalysis.71.ThefieldofFinance.A.Th1.ThefieldofFinance.2.Economicsprovidesthebroadpictureoftheeconomicenvironmentincludingthe:a.InstitutionalstructureoftheFederalReserveSystem.b.Commercialbankingsystem.c.Interrelationshipsbetweenvariouseconomicsectors.81.ThefieldofFinance.2.Ec1.ThefieldofFinance.3.Accounting,sometimessaidtobethelanguageoffinance,providesfinancialdatathroughincomestatements,balancesheets,andthestatementofcashflows.4.Financelinkseconomictheorywithaccountingdata.Allcorporatemanagersmustbefamiliarwithsuchdatainordertoassessthefinancialperformanceofthefirm.91.ThefieldofFinance.3.Ac1.ThefieldofFinance.B.Thedemandforfinancialmanagementskillsexistsinmanysectorsofaglobalsocietyincludingcorporatemanagement,financialinstitutions,andconsulting.101.ThefieldofFinance.B.Th2.Financeasafieldofstudyhasevolvedovertimeinresponsetochangingbusinessmanagementneeds.A.Financeachievedrecognitionasaseparatefieldofstudyinresponsetothecreationofgiantcorporationsattheturnofthecentury.B.TheworstdepressioninUnitedStates’historycausedashiftinemphasisfromrapidmergergrowthtopreservationofcapital,liquidity,reorganization,andthebankruptcyprocess.112.Financeasafieldofstudy2.Financeasafieldofstudyhasevolvedovertimeinresponsetochangingbusinessmanagementneeds.C.Themostsignificantstepintheevolutionofcontemporaryfinancialmanagementbeganinthemid-1950s.Emphasiswasplacedontheanalyticallydeterminedemploymentofresourceswithinthefirm.Thedecision-makingnatureoffinancialmanagementwasmanifestedintheenthusiasmforthestudyof:122.Financeasafieldofstudy2.Financeasafieldofstudyhasevolvedovertimeinresponsetochangingbusinessmanagementneeds.1.Allocationoffinancialcapitalforthepurchaseofrealcapital(plantandequipment).2.Efficientutilizationofcurrentassets.3.Capitalstructuretheory.4.Dividendpolicy.132.Financeasafieldofstudy2.Financeasafieldofstudyhasevolvedovertimeinresponsetochangingbusinessmanagementneeds.D.Theanalyticalorientationoffinancialmanagementfocusedonrisk-returnrelationshipsandthedesiretomaximizereturnatagivenlevelofrisk.E.Therapidinflationexperiencedintheeconomyinthe1970sandearly1980sfollowedbyalengthyperiodofdisinflationhasimpactedallareasoffinancialdecision-making.142.Financeasafieldofstudy2.Financeasafieldofstudyhasevolvedovertimeinresponsetochangingbusinessmanagementneeds.F.Thetechnologicalchangesinthe1990srapidlyimpactedthefinancialmanagementfunctionsofbusinessfirms.E-commerceacceleratedcashflowsandsignificantlyaffectedthemanagementofinventoryandaccountsreceivable.Financialmanagersmustremainsensitivetotheimpactsofe-commerceandtheinternetonfinancefunctionsinthe21stcentury.152.Financeasafieldofstudy3.FunctionsofFinancialManagement:Afinancialmanagerisresponsibleforfinancinganefficientlevelandcompositionofassetsbyobtainingfinancingthroughthemostappropriatemeans.A.Dailyfinancialmanagementactivities.1.Creditmanagement.2.Inventorycontrol.3.Receiptanddisbursementoffunds.B.Less-routineactivities.1.Saleofstocksandbonds.2.Capitalbudgeting.3.Dividenddecisions.163.FunctionsofFinancialMana3.FunctionsofFinancialManagement:Afinancialmanagerisresponsibleforfinancinganefficientlevelandcompositionofassetsbyobtainingfinancingthroughthemostappropriatemeans.C.Formsoforganization:Thefinancefunctionmaybecarriedoutwithinanumberofdifferentformsoforganizations:1.Soleproprietorship.a.Singleownership.b.Simplicityofdecisionmaking.c.Loworganizationalandoperatingcosts.d.Unlimitedliability.e.Earningsoftheproprietorshiparetaxedaspersonalearningsoftheindividualowner.173.FunctionsofFinancialMana3.FunctionsofFinancialManagement:Afinancialmanagerisresponsibleforfinancinganefficientlevelandcompositionofassetsbyobtainingfinancingthroughthemostappropriatemeans.2.Partnership.a.Twoormorepartners.b.Usuallyformedbyarticlesofpartnershipagreement.c.Unlimitedliabilityforallpartnersunlessalimitedpartnershipisformedwhichprovideslimitedliabilityforoneormorepartners.Atleastonepartnermustbeageneralpartner.d.Earningsaretaxedaspersonalearningsofpartners.183.FunctionsofFinancialMana3.FunctionsofFinancialManagement:Afinancialmanagerisresponsibleforfinancinganefficientlevelandcompositionofassetsbyobtainingfinancingthroughthemostappropriatemeans.3.Corporation.a.Mostimportantformofbusinessintermsofrevenueandprofits.b.Legalentity.c.Formedbyarticlesofincorporation.d.Stockholders(owners)havelimitedliability.e.Easydivisibilityofownership.193.FunctionsofFinancialMana3.FunctionsofFinancialManagement:Afinancialmanagerisresponsibleforfinancinganefficientlevelandcompositionofassetsbyobtainingfinancingthroughthemostappropriatemeans.3.Corporation.f.Managedbytheboardofdirectors.g.Doubletaxationofearnings:Earningsofthecorporationaresubjecttothecorporateincometax;dividends(distributednetincome)aresubjecttopersonaltaxation.SmallsubchapterScorporations,however,avoidthedoubletaxationdisadvantage.203.FunctionsofFinancialMana4.GoalsofFinancialManagement.A.Arethegoalsofthethreebasicformsofbusinessorganizationsthesame?Doesthemanagementofacorporationmakethesamedecisionthatasoleproprietorwouldmake?B.Agencytheory,amajorareaoffinancialresearch,focusesontherelationshipbetweentheownersofafirmandthemanagersofthefirm.214.GoalsofFinancialManageme4.GoalsofFinancialManagement.C.Becauseoftheirlargepercentageofownership,mutualfundsandpensionfundscaninfluencethedecisionsofmajorU.S.companies.D.Alternativegoals.1.Profitmaximization(ormaximizingearningspershare)hasseveraldrawbacks.a.Doesnotcaptureriskeffects.b.Failstoconsiderthetimingofthebenefits.c.Variationsindefinitionsofprofitcausemeasurementproblems.d.Inflationandinternationalcurrencytransactionscomplicatetheissue.224.GoalsofFinancialManageme4.GoalsofFinancialManagement.2.Maximizationofowner’swealthorshareholderwealthmaximizationifthefirmisacorporationisthegoalofthefirm.Valuationisthekeyconceptofthisgoal.Thevaluationprocesscapturesthetimingoftheexpectedcashflowsandtheriskassociatedwiththecashflows.234.GoalsofFinancialManageme4.GoalsofFinancialManagement.E.Incentivesformanagementtoactinthebestinterestoftheowners(shareholders).1.Theonlywayformanagementtomaintainitspositionoverthelongrunistobesensitivetoshareholderconcerns.2.Stockoptionincentives.3.Institutionalinfluence.244.GoalsofFinancialManageme5.SocialResponsibilityandEthicalBehavior.A.Isthegoalofshareholderwealthmaximizationconsistentwithsocialresponsibility?1.Inmostcasestheansweris“yes”.Maximizingshareholderwealthattractscapitalandprovidesemploymentandotherbenefitstothecommunity(national,state,local,etc.).255.SocialResponsibilityandE5.SocialResponsibilityandEthicalBehavior.2.Somesociallydesirableactionsmaybelesscompatiblewithshareholderwealthmaximization.Forexample,pollutioncontrols,equitablehiringpractices,andfairpricingstandardsmaybeinconsistentwithachievingmaximummarketvalue.Suchactionsmayhavetobemandatory.265.SocialResponsibilityandE5.SocialResponsibilityandEthicalBehavior.B.Unethicaland/orillegalfinancialpracticesmaylessenconfidenceinU.S.securitiesmarketsandmadeitmoredifficultformanagerstomaximizeshareholderwealth.Duringthe1980sand1990s,illegalinsidertradingactivitiesmadenewsheadlines.Insidertradingoccurswhenindividualsseektoprofitfromtradingusinginformationthathasnotbeenmadeavailabletothepublic.275.SocialResponsibilityandE6.TheRoleofFinancialMarkets.A.Financialmarketsarethemeetingplacesforpeople,corporations,andinstitutionsthateitherneedmoneyorhavemoneytolendorinvest.1.National,state,andlocalgovernmentsseekfundsinpublicfinancialmarkets.2.Corporationsraisefundsincorporatefinancialmarkets.286.TheRoleofFinancialMarke6.TheRoleofFinancialMarkets.B.Financialmarketsmaybeclassifiedinseveralways.1.Domestic.2.International.3.Corporate.4.Government.5.Moneyandcapital.a.Marketsthatfocusonshort-termsecuritiesthathavealifeofayearorlessarecalledmoneymarkets.b.Capitalmarketsaredefinedasmarketswheresecuritieshavealifeofmorethanoneyear.Capitalmarketsarefurtherclassifiedasintermediate(1-10years)andlong-term(morethan10years).296.TheRoleofFinancialMarke6.TheRoleofFinancialMarkets.C.Financialmarketsallocatecapitaltothehighestbidderwithinarisk-returnframework.Individualspossessingcapitalseektoearnthehighestrateofreturnatagivenlevelofrisk.Pricesofsecuritiesinthemarketreflectthecollectivejudgmentofallparticipants.Securitiespricemovementsprovidefeedbacktocorporatemanagersindicatingthemarket’sevaluationoftheiractivities.Corporationsraisecapitalbysellingnewsecuritiesintheprimarymarket.Securitiespreviouslysoldbycorporationstradeinthesecondarymarketbetweeninvestors.306.TheRoleofFinancialMarke6.TheRoleofFinancialMarkets.D.Inadditiontothepressureplacedoncorporatemanagementthroughadjustmentofsecuritiesprices,someinvestorsseektodirectlyinfluencecorporateboardsofdirectors.Institutionalinvestorshaveusedtheirinfluencetobringabouttherestructuringofanumberoffirms.Restructuringmaybemanifestedbyachangeinthecapitalstructureofthefirm,amergeroracquisition,sellingofflow-returndivisions,reductionsintheworkforce,andeventheremovaloftheexistingmanagementteam.316.TheRoleofFinancialMarke6.TheRoleofFinancialMarkets.E.Theinternationalizationoffinancialmarketsisnecessaryforthesupportofexpandinginternationalproductmarkets.Moderncorporatefinancialmanagersmustunderstandinternationalcapitalflows,electronicfundstransfer,foreigncurrencyhedgingstrategies,andmanyotherglobaltradingfactors.326.TheRoleofFinancialMarke6.TheRoleofFinancialMarkets.F.Theinternetandchangesinthecapitalmarkets:Technologyhassignificantlyimpactedcapitalmarkets.1.Costreductionfortradingsecuritieswhichhasledtoconsolidationsofmarketsandbrokeragefirms.2.Creationofnewelectronicmarkets.3.Internettradingprovidedbydiscountbrokeragefirmshasforcedfull-servicebrokerstoofferlessprofitableInternettradingtotheirclients.336.TheRoleofFinancialMarke7.FormatoftheText.A.Introduction:Anexaminationofthegoalsoffinancialmanagementwithinananalyticalframework.B.Financialanalysisandplanning.1.Reviewofaccountingrelationshipswithfinance.2.Ratioanalysis.3.Constructionofbudgetsandproformastatements.4.Operatingandfinancialleverage.347.FormatoftheText.A.Intro7.FormatoftheText.C.Workingcapitalmanagement:Techniquesformanagingthelevelsofcurrentassetsandshot-termfinancinginarisk-returncontext.D.Capitalbudgetingandrelatedvaluationconcepts.1.Timevalueofmoney.2.Costofcapital.3.Capitalbudgetingtechniques.357.FormatoftheText.C.Worki7.FormatoftheText.E.Long-termfinancing:Ananalysisofthecharacteristicsofthestructure,participants,andinstrumentsofthecapitalmarkets.F.Corporategrowththroughmergers:Anintegrationoffinancialmanagementconceptswithintheframeworkofcorporategrowthstrategy.G.Internationalfinancialmanagement:Anexaminationofthecomplex,riskyenvironmentofinternationalfinance.367.FormatoftheText.E.Long-Conclusion1.Thefieldoffinanceintegratesconceptsfromeconomics,accounting,andanumberofotherareas.2.Therelationshipofrisktoreturnisacentralfocusoffinance.3.Theprimarygoaloffinancialmanagersistomaximizethewealthoftheshareholders.37Conclusion1.ThefieldoffinConclusion4.Financialmanagersattempttoachievewealthmaximizationthroughdailyactivitiessuchascreditandinventorymanagementandthroughlonger-termdecisionsrelatedtoraisingfunds.38Conclusion4.FinancialmanageConclusion5.Financialmanagersmustcarefullyconsiderdomesticandinternationalbusinessconditionsincarryingouttheirresponsibilities.6.Dailypricechangesinthefinancialmarketsprovidefeedbackaboutacompany’sperformanceandhelpinvestorsallocatetheircapitalbetweenfirms.39Conclusion5.FinancialmanageFoundationsofFinancialManagementFoundationsofFinancialManagPart1IntroductionChapter1TheGoalsAndFunctionsofFinancialManagement41Part1IntroductionChapterSummaryThischaptertracestheevolutionandinterrelationshipsoffinanceasafieldofstudyandtheroleofthefinancialmanagerinadynamiceconomy.42SummaryThischaptertracesthLearningObjectives1.Thefieldoffinanceintegratesconceptsfromeconomics,accounting,andanumberofotherareas.2.Therelationshipofrisktoreturnisacentralfocusoffinance.3.Theprimarygoaloffinancialmanagersistomaximizethewealthoftheshareholders.43LearningObjectives1.ThefieLearningObjectives4.Financialmanagersattempttoachievewealthmaximizationthroughdailyactivitiessuchascreditandinventorymanagementandthroughlonger-termdecisionsrelatedtoraisingfunds.44LearningObjectives4.FinanciLearningObjectives5.Financialmanagersmustcarefullyconsiderdomesticandinternationalbusinessconditionsincarryingouttheirresponsibilities.6.Dailypricechangesinthefinancialmarketsprovidefeedbackaboutacompany’sperformanceandhelpinvestorsallocatetheircapitalbetweenfirms.45LearningObjectives5.Financia1.ThefieldofFinance.A.Thefieldoffinanceiscloselyrelatedtoeconomicsandaccounting.1.Economicsprovidesastructurefordecision-makinginsuchareasas:a.Riskanalysis.b.Pricetheory.c.Comparativereturnanalysis.461.ThefieldofFinance.A.Th1.ThefieldofFinance.2.Economicsprovidesthebroadpictureoftheeconomicenvironmentincludingthe:a.InstitutionalstructureoftheFederalReserveSystem.b.Commercialbankingsystem.c.Interrelationshipsbetweenvariouseconomicsectors.471.ThefieldofFinance.2.Ec1.ThefieldofFinance.3.Accounting,sometimessaidtobethelanguageoffinance,providesfinancialdatathroughincomestatements,balancesheets,andthestatementofcashflows.4.Financelinkseconomictheorywithaccountingdata.Allcorporatemanagersmustbefamiliarwithsuchdatainordertoassessthefinancialperformanceofthefirm.481.ThefieldofFinance.3.Ac1.ThefieldofFinance.B.Thedemandforfinancialmanagementskillsexistsinmanysectorsofaglobalsocietyincludingcorporatemanagement,financialinstitutions,andconsulting.491.ThefieldofFinance.B.Th2.Financeasafieldofstudyhasevolvedovertimeinresponsetochangingbusinessmanagementneeds.A.Financeachievedrecognitionasaseparatefieldofstudyinresponsetothecreationofgiantcorporationsattheturnofthecentury.B.TheworstdepressioninUnitedStates’historycausedashiftinemphasisfromrapidmergergrowthtopreservationofcapital,liquidity,reorganization,andthebankruptcyprocess.502.Financeasafieldofstudy2.Financeasafieldofstudyhasevolvedovertimeinresponsetochangingbusinessmanagementneeds.C.Themostsignificantstepintheevolutionofcontemporaryfinancialmanagementbeganinthemid-1950s.Emphasiswasplacedontheanalyticallydeterminedemploymentofresourceswithinthefirm.Thedecision-makingnatureoffinancialmanagementwasmanifestedintheenthusiasmforthestudyof:512.Financeasafieldofstudy2.Financeasafieldofstudyhasevolvedovertimeinresponsetochangingbusinessmanagementneeds.1.Allocationoffinancialcapitalforthepurchaseofrealcapital(plantandequipment).2.Efficientutilizationofcurrentassets.3.Capitalstructuretheory.4.Dividendpolicy.522.Financeasafieldofstudy2.Financeasafieldofstudyhasevolvedovertimeinresponsetochangingbusinessmanagementneeds.D.Theanalyticalorientationoffinancialmanagementfocusedonrisk-returnrelationshipsandthedesiretomaximizereturnatagivenlevelofrisk.E.Therapidinflationexperiencedintheeconomyinthe1970sandearly1980sfollowedbyalengthyperiodofdisinflationhasimpactedallareasoffinancialdecision-making.532.Financeasafieldofstudy2.Financeasafieldofstudyhasevolvedovertimeinresponsetochangingbusinessmanagementneeds.F.Thetechnologicalchangesinthe1990srapidlyimpactedthefinancialmanagementfunctionsofbusinessfirms.E-commerceacceleratedcashflowsandsignificantlyaffectedthemanagementofinventoryandaccountsreceivable.Financialmanagersmustremainsensitivetotheimpactsofe-commerceandtheinternetonfinancefunctionsinthe21stcentury.542.Financeasafieldofstudy3.FunctionsofFinancialManagement:Afinancialmanagerisresponsibleforfinancinganefficientlevelandcompositionofassetsbyobtainingfinancingthroughthemostappropriatemeans.A.Dailyfinancialmanagementactivities.1.Creditmanagement.2.Inventorycontrol.3.Receiptanddisbursementoffunds.B.Less-routineactivities.1.Saleofstocksandbonds.2.Capitalbudgeting.3.Dividenddecisions.553.FunctionsofFinancialMana3.FunctionsofFinancialManagement:Afinancialmanagerisresponsibleforfinancinganefficientlevelandcompositionofassetsbyobtainingfinancingthroughthemostappropriatemeans.C.Formsoforganization:Thefinancefunctionmaybecarriedoutwithinanumberofdifferentformsoforganizations:1.Soleproprietorship.a.Singleownership.b.Simplicityofdecisionmaking.c.Loworganizationalandoperatingcosts.d.Unlimitedliability.e.Earningsoftheproprietorshiparetaxedaspersonalearningsoftheindividualowner.563.FunctionsofFinancialMana3.FunctionsofFinancialManagement:Afinancialmanagerisresponsibleforfinancinganefficientlevelandcompositionofassetsbyobtainingfinancingthroughthemostappropriatemeans.2.Partnership.a.Twoormorepartners.b.Usuallyformedbyarticlesofpartnershipagreement.c.Unlimitedliabilityforallpartnersunlessalimitedpartnershipisformedwhichprovideslimitedliabilityforoneormorepartners.Atleastonepartnermustbeageneralpartner.d.Earningsaretaxedaspersonalearningsofpartners.573.FunctionsofFinancialMana3.FunctionsofFinancialManagement:Afinancialmanagerisresponsibleforfinancinganefficientlevelandcompositionofassetsbyobtainingfinancingthroughthemostappropriatemeans.3.Corporation.a.Mostimportantformofbusinessintermsofrevenueandprofits.b.Legalentity.c.Formedbyarticlesofincorporation.d.Stockholders(owners)havelimitedliability.e.Easydivisibilityofownership.583.FunctionsofFinancialMana3.FunctionsofFinancialManagement:Afinancialmanagerisresponsibleforfinancinganefficientlevelandcompositionofassetsbyobtainingfinancingthroughthemostappropriatemeans.3.Corporation.f.Managedbytheboardofdirectors.g.Doubletaxationofearnings:Earningsofthecorporationaresubjecttothecorporateincometax;dividends(distributednetincome)aresubjecttopersonaltaxation.SmallsubchapterScorporations,however,avoidthedoubletaxationdisadvantage.593.FunctionsofFinancialMana4.GoalsofFinancialManagement.A.Arethegoalsofthethreebasicformsofbusinessorganizationsthesame?Doesthemanagementofacorporationmakethesamedecisionthatasoleproprietorwouldmake?B.Agencytheory,amajorareaoffinancialresearch,focusesontherelationshipbetweentheownersofafirmandthemanagersofthefirm.604.GoalsofFinancialManageme4.GoalsofFinancialManagement.C.Becauseoftheirlargepercentageofownership,mutualfundsandpensionfundscaninfluencethedecisionsofmajorU.S.companies.D.Alternativegoals.1.Profitmaximization(ormaximizingearningspershare)hasseveraldrawbacks.a.Doesnotcaptureriskeffects.b.Failstoconsiderthetimingofthebenefits.c.Variationsindefinitionsofprofitcausemeasurementproblems.d.Inflationandinternationalcurrencytransactionscomplicatetheissue.614.GoalsofFinancialManageme4.GoalsofFinancialManagement.2.Maximizationofowner’swealthorshareholderwealthmaximizationifthefirmisacorporationisthegoalofthefirm.Valuationisthekeyconceptofthisgoal.Thevaluationprocesscapturesthetimingoftheexpectedcashflowsandtheriskassociatedwiththecashflows.624.GoalsofFinancialManageme4.GoalsofFinancialManagement.E.Incentivesformanagementtoactinthebestinterestoftheowners(shareholders).1.Theonlywayformanagementtomaintainitspositionoverthelongrunistobesensitivetoshareholderconcerns.2.Stockoptionincentives.3.Institutionalinfluence.634.GoalsofFinancialManageme5.SocialResponsibilityandEthicalBehavior.A.Isthegoalofshareholderwealthmaximizationconsistentwithsocialresponsibility?1.Inmostcasestheansweris“yes”.Maximizingshareholderwealthattractscapitalandprovidesemploymentandotherbenefitstothecommunity(national,state,local,etc.).645.SocialResponsibilityandE5.SocialResponsibilityandEthicalBehavior.2.Somesociallydesirableactionsmaybelesscompatiblewithshareholderwealthmaximization.Forexample,pollutioncontrols,equitablehiringpractices,andfairpricingstandardsmaybeinconsistentwithachievingmaximummarketvalue.Suchactionsmayhavetobemandatory.655.SocialResponsibilityandE5.SocialResponsibilityandEthicalBehavior.B.Unethicaland/orillegalfinancialpracticesmaylessenconfidenceinU.S.securitiesmarketsandmadeitmoredifficultformanagerstomaximizeshareholderwealth.Duringthe1980sand1990s,illegalinsidertradingactivitiesmadenewsheadlines.Insidertradingoccurswhenindividualsseektoprofitfromtradingusinginformationthathasnotbeenmadeavailabletothepublic.665.SocialResponsibilityandE6.TheRoleofFinancialMarkets.A.Financialmarketsarethemeetingplacesforpeople,corporations,andinstitutionsthateitherneedmoneyorhavemoneytolendorinvest.1.National,state,andlocalgovernmentsseekfundsinpublicfinancialmarkets.2.Corporationsraisefundsincorporatefinancialmarkets.676.TheRoleofFinancialMarke6.TheRoleofFinancialMarkets.B.Financialmarketsmaybeclassifiedinseveralways.1.Domestic.2.International.3.Corporate.4.Government.5.Moneyandcapital.a.Marketsthatfocusonshort-termsecuritiesthathavealifeofayearorlessarecalledmoneymarkets.b.Capitalmarketsaredefinedasmarketswheresecuritieshavealifeofmorethanoneyear.Capitalmarketsarefurtherclassifiedasintermediate(1-10years)andlong-term(morethan10years).686.TheRoleofFinancialMarke6.TheRoleofFinancialMarkets.C.Financialmarketsallocatecapitaltothehighestbidderwithinarisk-returnframework.Individualspossessingcapitalseektoearnthehighestrateofreturnatagivenlevelofrisk.Pricesofsecuritiesinthemarketreflectthecollectivejudgmentofallparticipants.Securitiespricemovementsprovidefeedbacktocorporatemanagersindicatingthemarket’sevaluationoftheiractivities.Corporationsraisecapitalbysellingnewsecuritiesintheprimarymarket.Securitiespreviouslysoldbycorporationstradeinthesecondarymarketbetweeninvestors.696.TheRoleofFinancialMarke6.TheRoleofFinancialMarkets.D.Inadditiontothepressureplacedoncorporatemanagementthroughadjustmentofsecuritiesprices,someinvestorsseektodirectlyinfluencecorporateboardsofdirectors.Institutionalinvestorshaveusedtheirinfluencetobringabouttherestructuringofanumberoffirms.Restructuringmaybemanifestedbyachangeinthecapitalstructureofthefirm,amergeroracquisition,s