Financial management lecture 6

       Let's begin the financial managements lecture 6. Starting with financial economics, as I explained in the very first lecture it is the same as financial system. And the financial system has financial markets, financial institutions, and the third pieces financial instruments, the first definition is amazingly simple, financial market is where buy and sale financial instruments, the first definition is a claim on assets or income of a business, the other definition is very good definition it is assets as a someone else liability, investment for the seller issuer is an obligation. Because it is someone else liabilities it is a kind of counter party risk, it means it is a risk associated with other side of the contract, the other party in the contract will not responsible for.

      Every financial instrument the second is an asset which is someone else liabilities at the same time. This is both an asset and liability, asset for ma and liability of central bank, and the first make financial instruments is stocks. Stocks representing equity. The second major instrument is the bonds, they representing dept. bond has a very special name. fixed income securities. And now providing explanation, financial instrument is exactly the same as financial asset, another very common name is paper asset. And another common name is security. Security has two or more different meaning, one her in financial economic and one in financial instruments, and sometimes in financial claim. So all of these are the same thing as the financial instrument and the primary class is currencies.
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