Building A Financial Structure Based On Credit

The behaviour of markets and investors, the decision making in the market place and the dynamics of demand and supply in any given market cannot be determined with a hundred percent accuracy. However master minds in the past have designed various techniques and theories that help investors make a particular buying decision, or to make choices logically. These theories and techniques help today’s investors to peep into the future and make almost immaculate predictions regarding the future behaviour of the market and the ongoing trends. A lay man night view the decision making of an investor as being solely based upon speculation but in reality every move that an investor makes today in the market place is backed up by sound calculation and

Investing behavior should be driven by information, analysis, and self-discipline, not by emotion or ‘hunch.’

The cash account is a balance sheet account and is in the liquid funds accounts It is important for the system be able to discriminate between balance sheet accounts (real accounts) and income statement accounts (nominal accounts). This classification is important for closing purposes and also for developing the financial statements. The account classification (liquid funds) is also important for the system when developing the financial statements.

As a result, holding cash would be essential component of the firm strategy. To develop new products, buy new equipment or expand geographically, firm has to spend money on marketing research, product design, prototype development and so on. Moreover, if a recession hits and the economy start to slow down,

I think that what Deborah Owens meant by "Cash is King" is that if you pay with cash it is easier to track how much money you have to spend and how much money you have left. I personally feel that only paying with cash is a smart way to save money. This is because you can physically see how much money you have left, if you were to pay with a debit card you would have to check the balance in order to see how much you have left. An all cash society would help benefit the people, but not necessarily the economy. This is because people would be willing to spend less money on things. According to Money Mozart, " If people started paying for things with cash they would only buy things they can physically afford, they would rent or buy smaller house

Cash on hand and Assets are important to account for when expanding into a new product line. When an accurate balance sheet is presented and all proper accounting is done, the company is able to leverage their financial strengths and not expose weaknesses when expanding into a new product line. The reasoning for such a strong focus on the balance sheet is to ensure that the capability to expand is present financially. Companies that have cash on hand and assets are displaying a positive indicator because it shows the ability to act and invest on demand. According to (Martin, 2002) “Cash is king regarding solvency, but customers shouldn't overlook a company's cash-burn rate” what this means is that even though there is cash on hand the ability to go through it is present especially when launching a new product lines in which case the ability to replenish cash reserves must present in the form of revenues.

If you are a new investor who is interested in investment history or how to make investments, purchase this book by Burton G. Malkiel. This book is ideal for any experienced investor who wants to brush up on their knowledge of investment techniques and theories also. There are not many books that have been written about investing. A Random Walk Down Wall Street is broken down into four parts which include; Stocks and Their Value, How the Pros Play the Biggest Game in Town, The New Investment Technology and A Practical Guide for Random Walkers and Other Investors. In total, there are fifteen chapters that cover a lot of key points that many will find interesting and informative.

This document is authorized for use only by Yen Ting Chen in FInancial Markets and Institutions taught by Nawal Ahmed Boston University from September 2014 to December 2014.

* The value of the stock may see an upward trend thus increasing the initial investor’s financial wealth

Further, our strategy involved paying attention to current events and attempting to use them to generate a return. For example, Horizon Pharmaceuticals’ stock price took a nosedive after an October 19th New York Times article suggested that Horizon was attempting to thwart Express Scripts’ attempts to lower the price of prescription drugs. The decision was made to buy 100 shares of stock in Horizon when its price spiraled down to a measly $14.62 per share, as we expected Horizon would do something to stop the bleeding, and historically has been a pretty volatile stock. Horizon came back with a scorching rebuttal in an open letter later that day, spiking its stock price more than 30% on October 23rd, and by October 28th, this move landed us our greatest return of any stock that we purchased and held until the end of the period: 18% (see appendix).

After twelve weeks of tracking the three companies I chose to invest in for the Stock Market Game the time has come to see if I made the right choice in investing in these three companies. The companies I chose were Facebook (FB), Exxon Mobil (XOM) and Home Depot (HD). I first invested a total of $24,977.54 and at the end of the twelve weeks I was left with $26,898. 55. In this paper I am going to talk about how I ended up with a profit of $1,921.01 and the factors that may have contributed to this gain.

We want to have a steady supply of cash in order to have a safety net for unforeseen problems in the future. It will also allow us to purchase additional assets when we need to.

Gittman (2004, pp. 312) divided stock into two types, such as common stock and preferred stock. He also showed that dividends are the outcome of investment. So, common stocks are an ownership claim against primarily real or productive asset (Higgins, 1995), but he also said that if the company prospers, stockholders are the chief beneficiaries, if it falters, they are the chief losers. Smith (1988) presented that stocks are one of the most popular forms of investment. People buy stocks for various reasons: some are interested in the long-term growth of their investment by buying low priced stock of a new company in the hope of substantially growth of share price over the next few years. Another reason he suggested that in a well established firm stockholders expect the stock growth will be stable over the long run. (Smith,1988).

The management of cash is essential to the survival of any organization. Managing an organization’s financial operation requires knowledge of the economy and ways to maximize revenue. For any organization to operate on a daily basis adequate cash flow is required. Without cash management the organization will be unable to function because there is no cash readily available in case of inconsistencies in the market. Cash is also needed to keep the cycle of the company’s operations going.

If on the next exchange day the prices went up significantly in a way that the investor gained immensely, the investment would be regarded as a high-risk investment.