FIN-610_Wk-1_Functions-of-Financial-Management

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Feb 20, 2024

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Analyze the Functions of Financial Management in Organizations Graded Discussion Week 1 1. Briefly describe how the financial environment has changed during the past few years. 2. Indicate some of the career opportunities in finance available to business graduates. 3. Identify and concisely describe the financial functions in the financial system. You are expected to make your own contribution in a main topic as well as respond with value added comments to at least two of your classmates as well as to your instructor. 1. The early part of the twenty-first century has been described as having unstable and unpredictable economic and financial markets. Following the dot.com start-up price bubble and the September 11, 2001 terrorist attack, unemployment rates climbed, housing values declined, and recession ensued through 2008-2009 (Melicher & Norton, 2013). Currently, there is more unpredictability ensuing following the COVID-19 pandemic, climate change, and the introduction of new technology and digital currencies (EconoTimes, 2020). 2. Melicher and Norton (2013) describe four types of workplace opportunities for a business graduate starting a career in finance – financial management, depository financial institutions, contractual savings and real property organizations, and securities markets and investment firms. Financial management positions include professions such as financial analyst (preparing and evaluating financial plans), tax analyst (preparing financial statements for tax considerations), and cost analyst (comparing budgeted operations versus actual expenditure). Positions within a depository financial institution might include a bank teller (customer assistance with banking transactions) or loan analyst (evaluating loan applications). Contractual savings and real property organizations may offer positions such as mortgage analyst (evaluating real estate loan applications and mortgage financing) or insurance agent (selling insurance and processing claims). Finally, positions within a securities market or investment firm may include professions such as stockbroker (managing clients purchases of stocks and bonds) or financial planner (analyzing client’s investments and insurance requirements for retirement planning) (Melicher & Norton, 2013). 3. Melicher and Norton (2013) identify six financial functions in the financial system – creating money, transferring money, accumulating savings, lending/investing savings, marketing financials assets, and transferring financial assets. Within the financial system, the monetary system is responsible for creating money in order to allow for the payment of goods and services, and the transferring of money, typically via money being held in a checking account and transfers being made electronically or via check. Financial institutions are then responsible for accumulating savings (safekeeping of individual or business deposits at a depository institution), and lending and investing savings (using the accumulated deposits to lend to businesses or consumers or invest in the stock of a business). Finally, financial markets are responsible for marketing financial assets (assisting with the sale of shares via marketing), and transferring
financial assets (assisting with the lending and selling of securities via organized stock exchanges) (Melicher & Norton, 2013). EconoTimes. (2020). How Finance Industry Has Changed Over the Years? https://www.econotimes.com/How-Finance-Industry-Has-Changed-Over-the-Years-1587393 Melicher, R. & Norton, E. (2013). Introduction to Finance: Markets, Investments, and Finanial Management (15 th ed.). Wiley. The past couple of years were unprecedented times for the global economy. Financial institutions worldwide are dealing with the effects of COVID-19 pandemic on the global and national economy. Many countries had already faced the outcomes of inflation, ad it looks like US is slowly falling into the inflation pot as well. Many businesses were destroyed by the outcomes of pandemic, and many are still trying to recover. I am employed by the logistics company. We transport goods (food in particular) from oversees. The freight and drayage rates had increased by up to 20% beginning January 1st, 2022. It creates a chain reaction, forcing the end consumer to pay the increased price. Hi Viktoriia, Great thoughts regarding the effects of COVID-19 on inflation rates. According to inflation indexes from the Department of Commerce and the Department of Labor, most measures indicate that prices rose faster in 2021 than in the past 40 years (Foster & Royal, 2022). This can ultimately lead to a declining economy where prices rise and consumers don’t have an income that can keep up with increase to the cost of living (Foster & Royal, 2022). Foster, S. & Royal, J. (2022) Higher Inflation: Winners and losers when prices rise. Bankrate. https://www.bankrate.com/investing/winners-and-losers-rising-inflation/
1. As the years go by, new emerging technology and digital assets is redefining the financial environment as we know it. A.I. is capable of performing regular human tasks and can perform such tasks much more efficiently than humans. With the emergence of Bitcoin and crypto, it is proving to be a threat to the U.S. banking system. 2. There are plenty of career pathways for a finance graduate student. They range from Financial/Budget Analyst, Accountant, to  financial advisor, credit analyst, or a Risk Specialist Hi Richard, Great point about how technology and digital assets are impacting the financial environment. After reviewing some of our fellow classmate’s discussion points, I realize that this also opens up new career paths for a finance graduate student in the fields of financial technology and cyber security. These professions will continue to be fast-growing and vital to ensuring a successful financial portfolio for companies and individuals alike. Some examples of professions within these fields of finance include blockchain developer (creating blockchain architecture, payment processing, user interfaces, and security measures), crowdfunding specialist (developing and redesigning crowdfunding interfaces and platforms such as GoFundMe and Kickstarter), quantitative analyst (developing models for reducing investment risks and finding opportunities for profit), and financial app developers aimed to target tech-savvy consumers (Columbia Engineering, n.d.). Columbia Engineering. (n.d.). 5 of the Top FinTech Careers. https://bootcamp.cvn.columbia.edu/blog/fintech-careers/#:~:text=Every%20day%2C%20fintech %20professionals%20race,to%20build%20careers%20in%20fintech . 1. Briefly describe how the financial environment has changed during the past few years. Ronald Melicher and Edgar Norton discuss how the financial environment has changed in this week’s reading. Specifically, the financial environment within the US and worldwide has struggled since the 2000’s, including the Great Recession. This impacted other economies as the health of these institutions are all linked worldwide. The Chinese economy, although historically boisterous, has been slowing in recent years, impacting many developed and developing countries since those markets are tied closely to Chinese products and resources.
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Hi Samuel, Nicely outlined post. I wanted to point out that Melicher and Norton do provide a nice overview of the financial environment as of the early twenty-first century, but because of the publish date, they are missing information post 2012. Since then, we have seen a great deal of new emerging technology including new digital currency and data processing tools (EconoTimes, 2020), as well as experiencing the impact of the COVID-19 pandemic on the economy including unemployment rates, supply shortages, and inflation rates which all influence the overall financial environment of today (Horowitz, J. & Brown, A. & Minkin, R., 2021). EconoTimes. (2020). How Finance Industry Has Changed Over the Years? https://www.econotimes.com/How-Finance- Industry-Has-Changed-Over-the-Years-1587393 Horowitz, J. & Brown, A. & Minkin, R. (2021). A Year into the Pandemic, Long-Term Financial Impact Weighs Heavily on Many Americans. Pew Research Center. https://www.pewresearch.org/social-trends/2021/03/05/a-year-into-the-pandemic-long-term- financial-impact-weighs-heavily-on-many-americans/