1. Financial Environment: FN6411 Summer 2004 Sris Chatterjee

2. From WSJ, 30 April 2004

3. Functions of Financial System Transferring Resources across Time and Space Managing Risk and Risk Sharing Clearing and Settling Payments Securitization Information Processing Financial Engineering and Innovations

4. Forms of Business Organizations Sole Proprietorship Partnership Corporations Joint Venture

5. Corporations Identified as: Inc (in USA), PLC (in UK), SA (in France), SpA (in Italy), NV (in the Netherlands), AB (in Sweden), AG (in Germany) Separation of Ownership and Management Governance Structures and Challenges Board of Directors: Duties and Obligations Shareholder Rights

6. Goals of the Firm Growth in Sales, EPS, Market Share, etc. Meeting Stakeholder Demands Maximizing Profits Maximizing Shareholder Wealth Based on Corporate Law Consistent with Market Discipline Unifies Diverse Objectives

7. Types of Markets Primary Market vs. Secondary Market Money Market vs. Capital Market Auction Market vs. Dealer Market Spot vs. Forward Market Forwards and Futures Options

8. Types of Investment Common Stock ADRs Preferred Stock Fixed Income/Bonds Federal, State and Munis Corporate Country Mutual Funds Open End Closed End Options and Futures

9. Major Stock Indexes USADJI, SP500 JapanNikkei 225 UKFT30, FT100 GermanyDAX FranceCAC 40 GlobalMSCI Equity

10. Rates of Return Single Period Multi Period Arithmetic Geometric or Time Weighted Rate of Return Money Weighted Rate of Return

11. Stock Price Dynamics Technical Analysis and Charting Fundamental Analysis Efficient Market Hypothesis Random Walk Model

12. Major Gate-Keepers SEC Justice Department and FTC FASB Rating Agencies Delaware Courts Exchanges

13. The Dark Side of Markets Crash of 1987 S&L Crisis Asian Crisis LTCM Dot-Com Bubble Enron, Tyco, Global Crossing, Parmalat