Overview and Introduction to Finance

These flashcards cover the fundamental definitions, historical evolution, and organizational structures of finance as discussed in the lecture.

Finance

The science and art of managing money, involving activities such as investing, borrowing, lending, budgeting, saving, and forecasting.

Barter System

An early exchange method where goods and services were traded directly, limited by the need for a double coincidence of wants.

Commodity Money

Items with intrinsic value used as mediums of exchange, such as gold, silver, and grains.

Medici Bank

A prototype for modern banking in Renaissance Italy that offered diverse financial services.

Joint-Stock Companies

Companies, such as the Dutch East India Company in the $17\text{th}$ century, that allowed for the pooling of capital from multiple investors.

Central Bank

An institution like the Bank of England (est. $1694$) that manages monetary policy, issues currency, and acts as a lender of last resort.

Sustainable Finance

Investment decisions and corporate practices shaped by environmental, social, and governance (ESG) criteria.

Reserve Bank of New Zealand (RBNZ)

Established in $1934$, the central bank responsible for issuing currency and overseeing monetary policy in New Zealand.

NZ Superannuation (NZ Super)

A government fund providing a base level of retirement income for New Zealanders, though often requiring supplements for a comfortable lifestyle.

Financial Manager

A professional who evaluates accounting data to make forward-looking decisions, focusing on risk, returns, and value maximization.

Accountant

A professional focused on the historical recording, classifying, and reporting of financial transactions to ensure compliance and accuracy.

FP&A

An acronym for Financial Planning and Analysis, a specific career path within corporate finance.

Sole Trader

A business owned and operated by one individual who has full control but faces unlimited liability for business debts.

Partnership

A business structure owned by two or more people who share profits and responsibilities, with general partners typically having unlimited liability.

Company

A separate legal entity owned by shareholders and managed by directors, offering limited liability to its owners.

Limited Liability

A legal structure where the financial risk of shareholders is restricted to the amount of their investment in the business.

Unlimited Liability

A legal obligation where owner(s) are personally responsible for all business debts and legal outcomes.

Double Coincidence of Wants

A limitation of the barter system where two parties must each have the specific good or service the other desires.

Medici Bank

An institution in Renaissance Italy that served as a prototype for modern banking and diverse financial services.

Amsterdam Stock Exchange

Established in $1602$, it was one of the first institutions to facilitate the buying and selling of shares.