Test 2

Economy depends on it, Money vs Barter, Unit of Value ,Euro/Yen/Pound, Control of Money Supply ,Global Exchange- Rise/Fall of Dollar , Too much money leads to inflation , Money needs to move around

portability, Divisibility, Stability Durability, Uniqueness

reliable, will not disappear, not portable, not easily divisible

Currency +Demand deposits = Total M1 +Time Deposits & Money Markets Accts. = Total M2 - Captures the amount of money in the system

Central Bank

Jerome Powell

Janet Yellen and Ben Bernake(2008 recess)

Federal Open Market Committee- 12 members, 12 Regional Banks

The people assessing the economy and determine whether the interest rate is getting higher or under control

they raise the federal interest rate up

they lower the federal interest rate

Federal Reserve oversees member banks in the region (New York Bank is the largest)

If the economy goes to a crisis ,people go to banks and try to withdraw all their money, Reserve requires member banks to keep certain percentages within banks to be prepared for runs

Janet Yellen (treasury is a gov agency)

Separate from the government, Buy/Sell Foreign Currency, Regulates Fed Reserve credit to member banks, Supervise banks, Collects data on money supply/economic activities , Processes Checks

Increase Discount Rate(interest rate), Sell Government Bonds, Set Credit Controls

Rate the Fed charges banks to borrow money

Reduce the Discount rate, Buy Government Bonds, Set Credit Controls

Commercial Banks, Saving and Loan, Association/Thrifts, Credit Unions

FDIC- insure banks, Sec- Stock exchange

eurodollar Currency Exchange, Letter Of Credit, Banker's Acceptance, World Bank, IMF

A promise by the bank to pay the seller a given amount if certain conditions are met.

which is a database that exists on many servers at the same time. Con; If you are the central bank its hard to know whats going on

Huge dip in the Stock market is a recession ,The small ups and downs are volatility, If theres no volatility the economy would be making no profit

captures the variance

Philanthropist ,Advocating high tax for investors,Well known as conglomerate empire

Long-term Funding For Businesses, Place to Buy/Sell Securities (Investments)

Secured or Debenture, Must be Repaid on maturity date, Interest must be paid whenever specified, Issuing bonds

Preferred or Common, Investment never has to be repaid, Not legally obligated to pay dividends, To Sell stocks

Assist Sale/Issue Of New Securities,Underwrite issues, Sells to Institutional Investors ,Help to give valuation of company , evaluate assets and liabilities

No Vote= No power in the company, Interest is Tax-Deductible, Temporary Source of Funds, Can be repaid before maturity with call provision

Increase Debt, Legal Obligation to Pay Interest, Repaid On Maturity Date

Sinking Fund, Callable, Convertible

No Repayment No legal Obligation and Does Not create Debt

Voting Rights; you have somewhat of a say, Dividends not Tax-Deductible, Management Works to keep stockholder Happy

Activist Investor ,Aim is to grab a big share of the stocks, storms board meetings and says a lot of complaints

Made Dell Public, Struggled with active investors, The company reversed and went private

Diversification, Timelines(Short or long), Safety & Risk, Income & Total Return

The better the portfolio the better your success

Risk,Yield, Duration, Liquidity, Tax Consequences

1-20 years, Taxable, Riskier than Gov bonds- higher yield

1-40 years, Exempt from Fed taxes and some states

2-30 years

Capital Gain vs Divident

tells a broker to buy or sell a stock immediately at the best price available

tells the broker to buy or sell a stock at a specific price, if that price becomes available

An action by a company that gives stockholders two or more shares of stock for each one they own.

when overall stock prices are rising (Bulls believe that stock prices are going to rise; they buy stock in anticipation of the
increase)

When Stock prices are declining (Bears expect stock prices to decline and sell their stocks in anticipation of falling prices.)

Pools Investors Money, Best For Small Investors, Index Fund , Diversification, Non-load vs load, open end vs closed-end

Stocks & Bonds

Stock on margin, Junk Bonds, Commondites

borrowing money from a broker to purchase a stock

High-risk, high-interest bonds.

Tracks Stock Market

Input/Output analysis, Input- Accounting Documents, Output- Financial Statements

Managers, Government , and Investors-Suppliers-Creditors

Their Financial Reports pinpoint problems/ opportunities

Assists with tax collection

provide a means to analyze business

Managerial Accounting & Financial Accounting

Inside Organization, C.M.A

Annual Report, Private Accountant, Public Accountant, C.P.A, Auditing, Tax Accounting, Government & Not-for-Profit Accounting

Public & Private

Auditing, Tax Consulting & COmpliance, Management Consulting

Management Accounting, Government Accounting, Academia

PriceWaterhouseCoopers(PWC), Deloitte, ERNST & Young, KPMG

Early Recognition of Revenue, Late Recognitions of Expense, Inadequate Reserves for Bad Debts, Reuters, and Liabilities, Changing Inventory Valuation, Phony Transactions with Partnerships

Ernst & Young cooked the financial info and mislead investors

Start of Accounting, Record/Journalize

Analyze, Recommend

U.S. Generally Accepted Accounting Principles

International Financial Reporting Standards- Global standard, Developed by the International Accounting Standards Board(IASB)

Balance Sheet, Income Statement, Statement of Cash Flow

Statement of Financial Positions (Assets and Liabilities & Owner’s Equity)

Statements of Revenues and Expenses( Revenues, Cost of Goods Sold, Gross profit, Operating expenses)

Statement of Cash Receipts & Disbursements

Assets= Liabilities +owners Equity or Owned=Owed + Owner’s Claims

within a year (12 Months)

Assets acquired before that measured period

Sales achieved during the 12 month period

How much it cost you for those Net sales

You entered the year with these from the previous year

purchases you made during this year

The inventory you have currently left at the end of the period

better than out of Stock; must keep some inventor to meet customer demand

Net sales- Cost of goods sold

Gross Profit - expenses and taxes

looking at the performance of other companies in the same year

Look at your own record across time

Means negative

Cash as of January 1st of the 12 month period you're looking at

how much money your company currently has

Uses percents to determine information so currency used isn't an issue

How much assets can be converted cash

Current assets / Current Liabilities

Cash+Marketable securities+ Receivables / current liabilities

Inventory

its not easy to get money from

measure the degree to which a firm relies on borrowed funds in its operations

Total Liabilities/ Owner's Equity

a smaller ratio, higher means they are struggling with debt

How profitable your company is (whether your company is in good or bad shape)

Operating success

Net Income/ Common Shares

Net Income / # Common Shares

Net Income/ Owners Equity

Inventory Turnover =Cost of Goods sold/ Avg. Inventory

Larger number is better means there are more sales over the smaller inventory

leads to higher activity ratios by moving factories closer to minimize travel time and inventory , while pushing sales

Look at the companies data across horizon (time)

Includes Balance Sheet, Income Statement, Cash Flow

to raise the money

have to raise the money , Planning, Budgeting, Investing/ Advising

Plan for the future, Operating Budget, StocHastic volume look at the data to determine the future values

Monthly expenses

New Product development
, Replacing capital expenditure, M&A( mergers and acquisitions), Expansion into new markets , Building new facilities

Internal sources & External Sources

retained earnings (Bal sht) and Owner Contributions

Sales of Partnerships, Venture Capital, Public Sale of Stock

Finance new and rapidly growing companies. Wealthy individuals looking to invest into a company ex. Silicon Alley

Raising funds through borrowing to increase the firm's rate of return