The Domestic And International Financial Marketplace Introduction - Financial Management

This chapter provides a look at the domestic and international marketplaces within which firms operate. These financial marketplaces serve the role of allocating scarce resources from saving units (such as individuals) to investing units (such as firms). One important element of the financial marketplace is the structure of corporate and personal taxation. The existence of corporate and personal income taxes has important implications for financial managers. Because so many financial decisions are based on after -tax cash flows, finance and business professionals must have a basic understanding of tax matters.

We provide an overview of the operation of the U.S. and international financial systems, distinguishing between the money and capital markets. The major financial intermediaries are discussed, and the operation and structure of secondary security markets are presented. The concept of an efficient market is developed. This chapter also illustrates how to calculate holding period returns for any investment.

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Financial Management Topics