As you will study in this week’s module, financial management is not just about managing the money coming into a business. It’s about maintaining profitability, which includes managing costs as well as revenue and planning for positive cash flow. Financial management also includes planning, deciding on how much growth and in what areas is important. Another objective of financial management is liquidity, which relates to how quickly or effectively cash is moving to and from the business. Maximizing return on capital is an important objective of financial management. This return could be measured in profits or in shareholder returns.
Financial markets, such as stock markets, bond markets, and derivatives markets, play a critical role in modern economies by facilitating the allocation of capital and risk among different participants.
Part A: Your readings introduce you to primary and secondary financial markets. Conduct additional research (using the NLU library) and respond to the following discussion prompts. Be sure to include Financial Institutions as well as Securities Markets. In your answer be sure to draw on your research, and all relevant readings and videos in this week’s materials. Also, be sure to provide examples to support your answers.
Clearly define, in your own words the structure and function of Financial Markets.
What are your thoughts on the role of financial markets in promoting economic growth and development? How do for-profit entities use financial markets to achieve their goals, such as raising capital, hedging risks, or generating profits?
What are some of the risks and benefits of participating in financial markets for different actors, such as investors, issuers, regulators, and the general public? How can we ensure that financial markets serve the broader interests of society while balancing the need for innovation and competition?
Can you think of any recent examples of how financial markets have impacted companies, industries, or the broader economy? How have different actors responded to these challenges and opportunities?
Part B: Financial markets are often associated with for-profit entities seeking to raise capital and generate profits. However, not-for-profit organizations also have access to financial markets and can use them to achieve their goals.
Discuss the use of financial markets by not-for-profit organizations, and how does it differ from the use of financial markets by for-profit entities?
What are some of the challenges and opportunities associated with financial market participation for not-for-profit organizations, such as regulatory compliance, reputational risk, or fiduciary responsibilities?
How can not-for-profit organizations ensure that their financial market activities align with their mission and values, and how do they balance their financial needs with their social objectives?
Can you think of any examples of not-for-profit organizations that have successfully used financial markets to achieve their goals, and what strategies did they use? How have these organizations responded to changing market conditions and stakeholder expectations?
“Your first posting should be approximately 400 words.
