APS审核金融学复习资料
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In this course, I learned basic financial concepts, such as money, credit and interest rates, financial
institutions, financial instruments and financial markets.
Basic concepts of finance
1. Money
A commodity that is legally established as an exchangeable equivalent of all other commodities.
Money as a medium of exchange. The purchasing and selling are done through the money.
Money as a unit of account. It helps to measure the value of goods and services.
Money as a store of value. Money held’s in the form of cash is considered highly liquid assets.
Money as a standard of deferred payments. In today economy buying and selling of goods are
made on the basis of credit.
2. Credit
The behavior that they loan you money to use which you must in turn pay back including interest.
Credit tools: cheque, commercial bills, commercial paper, bond, stock.
3. Interest
(Simple interest) Interest paid only on the original principal, not on the interest accrued.
Interest = principal x rate x n(期限) 利息=本金x利率x n (期限)。
Sum= principal x (1+ rate x n) 本息和＝本金x（1＋利率x n）。
(compound interest) Interest computed on the accumulated unpaid interest as well as on the
original principal.
Sum=本金x (1＋利率) x n Sum= principal x (1+ rate) x n
Nominal interest rate r includes inflated factors announced by central bank; Real interest rate R
excludes the inflation. Price index is P, so their relationship is R= (1+r)/(1+p) -1 in detail. And when
inflation rate is at a low level, this formula can be simplified as R=r-p.
4. Foreign exchange
It is other countries’ money.
The foreign exchange rate is the rate at which one country’s money can be exchanged into
another’s.
直接标价法(Direct Quotation)； 间接标价法(Indirect Quotation)
即期汇率(Spot Exchange Rate)； 远期汇率(Forward Exchange Rate)
Foreign exchange reserves are stocks of gold or convertible foreign currency held by central banks
or governments to enable them to intervene in foreign exchange markets to influence the exchange rate.
If a currency is free-floating自由浮动, its exchange rate is allowed to vary against that of other
currencies and is determined by the market forces of supply and demand.
A movable or adjustable peg system可调整的盯住汇率制 is a system of fixed exchange rates, but
with a provision for the devaluation of a currency. For example, between 1994 and 2005, the
Chinese yuan RMB was pegged to the United States dollar at RMB 8.28 to $1.
Financial institution
1. Central bank
A central bank is a public institution that manages a state's currency, money supply, and interest
rates. Central bank oversees the commercial banking system of their respective countries and also
prints the national currency, which usually serves as the nation's legal tender
2. Commercial banks
Commercial banks: as credit and payment media, let people' deposits into capital, creating the
current credit instruments such as checks.
Banking activities: savings, loans, investment, exchange, trust, leases, consulting, bank cards,
lending.
3. Specialized banks
investment banks, Chinese Agricultural Development Bank
Financial instruments
1. Cash Instruments
Cash instruments have directly available market value and market forces directly determine their
value. Cheques, shares, bonds are some examples of cash instruments. If lender and borrower
agree over the transferability, deposits, and loans are also cash instruments.
2. Equity-based Instruments
Equity instruments are a way to fund operations and provide evidence of ownership. The common
types of equity instruments are common stock, preferred stock, dividend, etc.
Common stock works as an equity instrument when a public company needs to raise funds.
Common stocks don’t guarantee dividends. When a company faces a financial struggle that
leads to liquidation, common stock is paid to stockholders as a last option. The board of directors
is elected by common stockholders and this form of equity yields higher rates of return.
Preferred stock is similar to common stock. When a company goes into liquidation, preferred
stockholders are in the second position to be paid after bondholders. When a company is in a
profitable position, preferred stockholders receive an increased dividend. Preferred stock is
flexible, and some preferred stocks are convertible.
Dividends are paid by publicly listed companies as a reward for investors. Dividends should be
