Treasury

Treasury

Why is a share of Microsoft common stock an asset for the owner and a liability for Microsoft ?

The capital of the company include a single share who buy the share and investing in the share capital of the company and give the money to running the company. That will be called the shareholder and shares will be the assets of the shareholder. Because the company needs capital to run the company. Also, they have liability need to pay back the money to shareholder. They have the agreement to protect the share issue.
Total assets – Total liabilities = shareholders equity.   We need to understand this relationship, it show the demand on the company assets.


2. Discuss some of the manifestations of the globalization of world capital markets

The Globalization can make a visualize firm who has raw materials from one domestic company and financial capital from the other someone. Make the goods and sell the product in other national markets. The economic and political events will affected the stock market goes up and down. The good news will make the stock market goes up. The market is more diversifies, the prediction and future planning will be more difficult.   It will affected the trading currency, too. For example, you want to use US dollar to buy Chinese Yuan. The global operations affected the international banking and foreign exchange risk.


3. Why was the Federal Reserve System set up with 12 regional Federal Reserve Banks rather than one central bank as in other countries
The Federal Reserve System will let regional bank knows and doing something to prevented power from a group who want to do their way.   It has a long-standing of district of centralized power. From this system, control the Federal Reserve Board, this board have power to control the money supply and the credit structure.

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