Mangmt 1010 1st Edition Lecture 5 Outline of Last Lecture I Marketing Outline of Current Lecture 1 Definition of the Finance Function 2 What are securities A Security and exchange commission B Investment banks 3 Common stock A Investment traits of common stock 4 What is a bond A Types of bonds 5 Making choices Current Lecture I II III Definition of the finance function Planning obtaining and managing the company s funds in order to accomplish its objectives Today s focus is on how large businesses obtain funds through the securities markets What are securities Stocks and binds representing secured or asset based claims by investors against issuers Company s sell stocks to get money Bond No voting rights A What is the security and exchange commission SEC Making sure companies follow rules regarding those markets B What is an investment bank IPO s Financial institution engaged in issuing and reselling new securities Common stock Equilibrium Expectations of future growth These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Apples total market value is higher than Samsung A Investment traits of common stock Common stocks are among the riskiest of all securities Common stock offer high growth potential Blue chip stock is issued by a well established company with a sound financial history and a stable pattern of dividend payouts IV What is a bond IV Security through which an issuer promises to pay the buyer a certain amount of money by a specified future date A Types of bonds Government bond is issued by the federal government Municipal bond is issued by a state or local government Corporate bond is issued by a company as a source of long term funding Making choices Diversifications and asset allocation 1 Diversification Reduce risks and just buy 1 stock w 1 company Unsystematic risk 2 Asset Allocation What percent you re going to invest in an asset clause Ex Housing real estate