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# Financial Instrument Notes **FIN101** **1. Funds and Resources** * Focuses on funds & how it's managed * Cash flow system includes circulation of money, granting credit, making investments, and providing banking facilities **2. Concepts (Everything Else Being Equal)** 1. More value is preferr...

# Financial Instrument Notes **FIN101** **1. Funds and Resources** * Focuses on funds & how it's managed * Cash flow system includes circulation of money, granting credit, making investments, and providing banking facilities **2. Concepts (Everything Else Being Equal)** 1. More value is preferred to less - make money grow even more. 2. The sooner cash is received, the more valuable it is. 3. Less risky assets are more valuable than riskier assets. **3. Financial Services** * Functions provided by organizations that deal with money management (e.g., banks, insurance companies). * Shows how to invest money. **4. Managerial (Business) Finance** * Deals with decisions firms make regarding cash flow, plant expansions, and what securities to issue. **5. Notes** * Allocation or utilization of funds — where financial resources (cash, inventory, etc.) needed by the firm are used. **6. Goals** a. Acquire funds from the right sources at the right time; make right connections that least cost provides an advantage. b. Effective cash management - detailed cash flow budget and use it as planned. **7. Inventory Management** * Inventory needs to be managed effectively - enough reorder point (ROP). * Overstocking is costly, as money is not circulating. * Understocking loses customers. **8. Investment Decisions** * Invest excess funds to match investments to expenses. **Other Information** * **Universal Interest**: 0.125% (deposit) * **Interest Spread**: Difference of total interest earned from bank based on deposit. * **Investment**: Financial Asset (e.g., life insurance); Non-financial Asset (e.g., piggery, poultry, jewelry); Representative Money * **General Areas**: Financial Markets & Institutions (e.g., banks, insurance, savings, loans, credit unions); Requires understanding of factors causing interest & returns in financial markets; Capital Market (e.g. stocks, long-term securities), Money Market (short-term securities), Derivative Market (assets to grow, options, contracts).