If, revenues > expenditures If, revenues < exppluses fiscal deficits
Hence, governments usually use two methods to cover fiscal deficits. One is raise tax rate (it may cause dissatisfaction from the public directly), another is to issue treasury bonds to cover deficits (it means the government will borrow money from the public and guarantee to repay principal with interests to the public in the future).
your own money or issue stock to public
to raise capital
borrow money from bank or issue corporate
bonds to public
C. Finance (from corporate perspective), in Chinese means “公司财务”.
For a company, its assets are composed of equity (所 有者权益/自有资金）and liabilities (负债）.
Assets = Equity + Liabilities
b) direct finance, with investment banks as intermediaries:
providing funds
thru buying shares
investors (lender)
a company (borrower)
dividends
A company Acquires long-term funds by issuing stocks to the public. And the investors become the shareholders (owners) of the company. The shareholders have the voting powers and make decisions on some important issues of the company.And the company will give the dividends to the shareholders in the future if making profits.
Prospects
A. Finance v. Provide capital (money) and capital movement，with financial institutions as intermediaries, in Chinese means “融 资”.
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International Finance
The Score Arrangement
Total Score = Ordinary (30%) + Final Exam (70%)
Introduction To “Finance” From National, Corporate, And Personal
B. Finance (from national perspective) n. in Chinese means “国家财政”.
Governments obtain revenues from collecting taxes and use these revenues for public expenditures, such as social welfare, military expenditures, education, environmental protection, and so on.
Bank (lender) Public investors
capital
a company (borrower)
principal with interests
A company may borrow long-term funds by issuing long-term corporate bonds to the public. It is a temporary transfer of ownership of funds from the bond buyers (investors) to the company. And the company promises to pay back the principal with interests to the bond buyers in the future. Here, commercial or investment banks play the role of financial intermediation and collect fees for this services, instead of interests.
temporary transfer of ownership of funds from the bank to the borrower, and the borrower promises to pay back principal with interests to the bank in the future.