Mangmt 1010 1st Edition Lecture 5 Outline of Last Lecture I. MarketingOutline of Current Lecture 1. Definition of the Finance Function2. What are securitiesA. Security and exchange commission B. Investment banks3. Common stockA. Investment traits of common stock4. What is a bondA. Types of bonds5. Making choices Current LectureI. 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 marketsII. 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 rightsA. What is the security and exchange commission (SEC)- Making sure companies follow rules regarding those marketsB. What is an investment bank?- IPO’s- Financial institution engaged in issuing and reselling new securitiesIII. 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- Security through which an issuer promises to pay the buyer a certain amount of money by a specified future dateA. 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 fundingIV. Making choicesDiversifications and asset allocation 1. Diversification-Reduce risks and just buy 1 stock w/ 1 company- Unsystematic risk2. Asset Allocation- What percent you’re going to invest in an asset clause-Ex. Housing real