thelearnergirl-stuff-blog

[thelearnergirl-stuff-blog]

Week 3

Ordinary Annuity:

-equal amounts

-made in equal time intervals

-occurring at the end of each period

FV=Ax[{(1+r)^t - 1}/r]  

[thelearnergirl-stuff-blog]

WEEK 2:

#The big factor that influences financial decision making is the larger system within which this decisions are made.

Decisions in market systems:

FREE MARKET:

-supply and demand

-little or no interventions

-private ownership

-competition

REGULATED MARKET:

-prices are pre-determined

-prohibitive level of command and control

-few agents influence information

Positive aspects of financial market:

-good example of free market

-help money flow

#In a free market economy money flows in the direction that gives it the greatest chance to multiply.

#The framework that is provided for how resources can be allocated to generate wealth and income distribution is known as THE INVISIBLE HAND.

#Joseph Schumpeter famously referred to the progression that describes the destruction of the OLD before the NEW is CREATIVW DESTRUCTION.

# Market value= Total share x share costs (trading in stock market)

#All companies that raise money from the financial debt and equity markets that is from bonds and from stocks invest in both current and fixed assets.

Fixed assets:

-inventory , land ,building ,equipment ,machinery

Intangible assets:

-patents, trademarks, goodwill

Cash flow

-generated through sales

-spent on operating expenses

-Financial expenses

-taxes to government

#earings=cash generated – cash spent

Types of markets:

1.       Primary market

2.       Secondary Market

3.       Money market

4.       Capital market

5.       Insurance market

6.       Foreign exchange market

7.       Commodity markets

Time value of money:

The time value of money refers to a process that determines how money is valued over time.

Future value=  present value x (1+R)^t

R=Annual percentage rate

t = time

If M= frequency, M>1

FV=PV x (1+R/M)^(t x M)

[thelearnergirl-stuff-blog]

Learning About Finance

Hi! I’m from India. After my graduation I decided to pursue MBA. And my specialization is in Finance. But being an my knowledge in this field is not adequate. So I enrolled for an online course on Coursera, Finance For Everyone: Decisions. I’m really hopeful that this course will help for my MBA. This is a 4 week course. At the end of the course I’ll be able to make my personal financial decisions, understand financial languages, calculation. It will surely increase my knowledge in this field. So far I have completed the lessons of the first week. And as an assignment I was asked to make a learning portfolio and maintain it. So this is actually my assignment.

So what I have learnt so far……..

What is Finance?

-Decisions and processes that allocate money for their most productive use i.e getting and spending money to achieve underlying goals.

-Finance implicates  money related decisions in all sectors of economy.

Financial Decisions:

-determined by standard calculations

-Indirectly or directly related to money

-Revisited as social contexts changes

-Rely on several Universal Attributes

3 Aspects of Financial Decisions:

-Motivation

-Money Flow

-Repercussions

# Financial decision making is judged by how much share price can be increased or how quickly a drop in share price can be stopped

Financial Goal inform choices

-Desired money raised

- Type of the money

-High or low risk

-Short or long term

#Money can be of 2 types:

-Own money

-Others’ money

Money Related decisions can be:

-Borrow

-Invest

-Manage

# These decisions are motivated by goals:

-choices depend on your relation to that money

Rate of Return = Gain/Investment

Financial Marketplace:

-Drive the economy

-Efficiently reallocate money from those who have more to those who have less

-Redistribute surplus money to those who need it

-Transfer money via lending

Lenders & Borrowers:

-Households

-Companies

-institutions

-Government

# Equity owners who invested their money called shareholders.

# Those who lent money to the company called bond holders.

 And that is it for the first week. I’m looking forward to learn more in upcoming weeks.