Money, financial management, and securities

cc licensed ( BY ) flickr photo shared by zoonabar

To wrap up the semester, we’re looking at Money and the Financial System and Financial Management and Securities. One area that ties together both financial management and the financial system is securities markets. Businesses use securities markets as a source of finance, and individuals use them as a source for investments. There are two main types of securities; stocks and bonds. Stocks represent ownership in a company. From a finance perspective, issuing stock is good because there’s no obligation to pay dividends, the infusion of cash helps the balance sheet, and the money never has to be repaid. The downsides are that selling stock gives up control of the firm, and that dividends, unlike interest, aren’t tax deductible. Bonds are a form of debt financing. When a company issues bonds, it promises to make regular interest payments based on the coupon rate and then pay back face value on the maturity date. The advantages of debt financing are that creditors don’t get any say in how the company is run, interest paid is tax-deductible, and eventually the debt will be retired. The disadvantages are that, unlike dividends, there is a legal requirement to pay interest, the additional debt can make the balance sheet worse, and face value must be repaid at maturity. Companies that issue stocks and bonds sell them on the primary markets to obtain capital, but most investors buy them from other investors on the secondary markets.

The banking system is regulated by the Board of Governors of the Federal Reserve. The Federal Reserve (commonly known as The Fed) has as its primary mission stabilizing the US money supply through monetary policy. In addition to controlling the money supply, the Fed’s reserve requirement also strengthens the banking system by helping to avoid bank runs:

Final exam information and study guide

As you know, the final exam is scheduled for December 17 from 1 to 3 pm. It will be held in room 2357 on the Martin Campus.

It is a proctored test, so you will need to come to campus to take the test. You will take the midterm in Canvas, so you won’t need to bring pens, pencils, or scanner forms with you (just make sure you can remember you Canvas password!).

The test will be multiple choice, and to assist you in studying, I have prepared the following study guide. Good luck!

Money and the Financial System

The definition of money is anything exchanged for goods and services.  It can be in the form of paper money, a checking account, a savings account and certificates of deposit.  These are kept at financial institutions like banks and credit unions.  Today many people use debit cards instead of paper money  With paychecks being direct deposited and automated teller machines everywhere, everything seems to be going electronic.  I know I prefer my debit card to cash and do a lot of banking online. Credit cards are also very convenient and they let us get an item now and pay for it later but if you keep a balance you have to pay interest.

The Federal Reserve Board regulates the financial industry and makes sure there is a balance between the supply and demand for money.  They also regulate the insurance for financial institutions to make sure individuals do not lose their money if the bank fails.


Accounting is the language of business! By far the most meaningful thing I’ve taken away from this chapter. Looking at it now I realize how true that really is. Without it, we would never be able to run a successful business or even know if we are profitable or not. Accounting keeps track of all the financial data put into our business, organizes the information, and then translates it into something we can use to lead us in a better way. VERY IMPORTANT!


You wouldn’t dare spend money if it was trapped in a box and you couldn’t see how much you had, you would be too fearful to spend it all. Accounting works in the same way. It tells the owners of the company how much they can afford to spend to improve their business and keep up with expenses. Without accounting, which every company should invest in getting a proffesional to do it I believe, businesses would ultimately fail. Their accounts would run dry and everything would be so clustered and unorganized that it would be impossible to track where your money is going every month.



I got addicted to that beer game! Very fun way to represent a model of how supply chain management works. This chapter taught me a lot about the sort of work that I would like to go into. I’d like to do something with business and this is an interesting chapter to kind of get a more inside look at what I can expect in the business line of work. The game taught me how hard it can be just to balance an inventory, much less keep customers satisfied. My first job I’ve ever worked was at a small, family-0wned barbeque restaurant that was just opening up. The location, in my opinion, was great. (Right off one of the main highways, across the street from a really big neighborhood that I lived in.) However, the place barely generated any business and the family ended up having to close down the place after only 4 months. It was interesting to be in that sort of situation for my first job though. The manager was the owner’s youngest son who was only a couple years older than I was. Everyday we would talk with one another about what we would be doing differently to make the place more successful. We thought our ideas were solid and really would have worked, but of course the owner never even listened to a word we had to say.


(His loss I guess.) We did no advertising and the prices were a little ridiculous for barbeque. This is where learning the pricing strategy in this chapter becomes so important. I can remember countless times customers would come in and leave after seeing the price. In economics we learn a lot about supply and demand and the rule goes that if the demand isn’t as high as you want/need it to be, then you lower the price. The owner never did this, and lost a large portion of the possible clientel who he could of got hooked. The food was really good, and I know people would have came back repeatedly if they tried it once. But the owner was just too set in his ways and I believe his business fell because of that.


This is what the restaurant would look like on a regular basis…

CH 11 (Marketing and Customer Driven Markets)

My older sister recently graduated from Texas Tech with a marketing degree so a lot of information in this chapter were things I’ve heard directly from her. She’s told me about how much they emphasize on the same 4p’s we’ve learned in this chapter.  From producing a prodcut that reaches a certain target audience, to advertising it in a way to achieve the best possible results is what she said they placed a heavy importance on in her classes. It’s funny to hear about these things because once you learn how important advertising is and how strong of a tool it is, you begin to see all the advertisements on tv in a different light. Everything put into those commercials are there for a purpose and intended to reach a certain group of people. Once you realize that, you can see why these companies are able to get these products off the shelves and into the hands of the people they intendced it to get to.


I mean even deciding what channel a commercial will air on is a big advertising move that I have started to notice. (for example Viagra commercials are always coming on the History and Discovery channel, and yet I’ve never seen one aired on MTV haha) In the type of free market society we live in, customers are the ultimate driving force of our economy and it’s what decides the price of a certain product. Adam Smith’s “invisible hand” is something my conomics professor has constantly stressed as to why our market works the way it does.


As for the ice skating rink question you asked in the blog, I have a friend that has been working there since they opened and he says it’s packed every single night; he even said there was ticket scalping going on in the parking lot! So, I guess there’s always a market for some things no matter where you are; just goes to show how spontaneous people can be.

CH 10 (Managing Human Resources)

I can relate alot with this particular chapter in terms of having a job and “employment at will.”  I already knew about what this was because it is preached to us daily at work that we are replaceable and that we need to be conducting our work in an exceptable manner or we WILL get fired. Definitely works as a motivator… But I enjoyed watching the videos on the class blog; they gave me a good laugh- especially the one from the movie Waiting, that’s a great movie haha. I think the presence of unions are great for employees and help keep work conditions fair and reasonable. Before there were Unions in the U.S. child labor and unsafe working conditions were prominent in everyday life. I remember reading in a book once that if a man were missing an arm or leg it was more likely due to the dangerous work done in the fatories rather than coming back from a war.


I mean not even wearing shoes, REALLY?!

Today, Unions work together to try and improve life for workers and that is something I value very much. Big corporations, like Wal-Mart, need to see that we are not just pawns in their scheme that they can just play with and manipulate; We are American people providing a service for them and we need to be respected for the work we do and taken care of by our employers, not threatened.




A reflection on my posts…

I have learned tons! I don’t know everything but I know a lot more,especially because have been participating in Intro to Business, Principles of Marketing, and Principles or Management all at the same time. The hardest thing was to keep everything straight in my head, because I may be covering a chapter in Intro to Business that I covered weeks before in another class, but it was also very helpful, and I could really understand better how everything worked together. I am more aware of what it takes to have a successful business, and also where to go if I have any questions. In the future I will refer back to my Business Textbook (yes i’m going to keep it) and for myself will be using  to get me to the right places and guide me on registering my business name and obtain my business license and much more.

I had always thought of blogging but didn’t know where to start. I was happy that I really had no choice but to figure it out. Sometimes I need an extra push. I am not a pro but at least I know where to start and some basics.

A business requires a lot more than just an idea it takes a lot of planning.

I feel that I am a few steps closer and not so lost in the dark about starting, operating, and managing a business. I now have more resources to find answers. I believe that I learned a great amount of information that I have an advantage now by knowing and understanding Business.

financial management + securities markets

So Yes money makes the world go around, but managing money the correct way makes it turn smoothly! If the wrong decision is made using money it can result in failure. Financial management is a huge responsibility and refers to the tools, approaches and policies a company puts into place to make money, grow its customer base, pay vendors and service providers on time, and raise cash to fund short-term initiatives and long-term expansion plans.

Securities markets are for buying and selling securities. Check out Wells Fargo Rebrands Merlin Securities to Wells Fargo Prime Services by clicking here.

Accounting and Financial Statements

Because the main goal of any company is to make a profit, all companies must use accounting to keep track of their financial information.  This helps managers see the company’s cash flow and prepare a budget, or financial plan, for the future.  Accountants list all transactions in a journal as a credit or debit to keep the accounting equation, assets equal liabilities plus owner’s equity, in balance.

A balance sheet is a financial statement where the owner can see exactly where the company stands financially at any given time.  Other financial statements are used for banks if a company needs a loan, to file taxes, or to provide an annual report to the stockholders or investors.