1 - Identify the three key financial statements that corporations are required to prepare and describe the type of information found on each

1. 3 Important financial statements

Income statement

The income statement commonly called Profit and loss (P&L) statement, measures the earnings of an entity's operations over a given period of time, such as a quarter or a year. The income statement is used to measure profitability, creditworthiness, and investment value of an entity. When its information is combined with information from other statements, they collectively help assess the amounts, timing , and uncertainty of future cash flows. It shows how revenues are transformed in to net income or net profit.

Balance sheet

The balance sheet(sometimes called a statement of financial position) is an essential tool in assessing the amounts, timing and uncertainty of prospective cash flows. It is reffered to as a balance sheet becuase of the balance expreesed by the accounting equation:

Assets= Liabilities+ Shareholder's equity.

Balancesheet shows the financial position of a company. Balance sheet helps users evaluate the capital structure of the equity and assess the entity's liquidity, solvency, financial flexibility, and operating capability. The components of balance sheet are Assets, Liabilities and Equity.

Statement of cash flows

Cash is company's most liquid resouse =, and therefore it affects liquidity, operating capability and financial flexibility. Statement of cash flows shows the company's cash inflows, cash outflows  , and net change in cash from its operating, investing and financial activities during the financial period, in a manner that reconciles the beginning and ending cash balances.

2. Role of Investment Bankers

Investment banks ard financial institutions that assists companies and governments in issuing securities. The services of an investment bank includes providing advice, selling securities, and underwriting. When an investment bank acts as an underwriter, it bears some or all of the risks of selling and holding the securities in exchange for a premium. Their Other job duties include assisting clients with mergers and acquisitions (M&As) and advising them on unique investment opportunities such as derivatives.

3.Stock and bond comparison

Bonds are debts while stocks are stakes of ownership in a company. Stockholders receive divident while interest payments are made in the form of coupon payments to bond holders. The risk level is high for stockholders since it depends upon the performance of the issuer. So there is no guaranteed return. Risk of bond holders is relatively low since bond holders are prioritized for repayments. Stocks tend to earn more than bonds - especially long term. Additionally, stocks can offer better returns if the company growth is exponential, earning the investor potentially millions on an originally miniscule investment. For investors willing to take the risk, stocks can pay more than bonds in returns as the company's stock could continue rising.

4. Four different degrees of competition

1. Monopoly

In monopoly, there is only one seller in the market. The market could be a geographical area, such as a city or a regional area, and doesn’t necessarily have to be an entire country. Price of the product is decided by the seller, not by the demand and supply.

Eg. Your natural gas company.

2. Monopolistic competition

In monopolistic competition, there are many sellers. They don't sell identical products. Instead, they sell differentiated products. The products are differentiated based on their style, smell, color, shape etc.

Eg. Restaurent businesses, Hotels and pubs

3. Oligopoly

Oligopoly means few sellers. In an oligopolistic market, each seller supplies a large portion of all the products sold in the marketplace. In addition, because the cost of starting a business in an oligopolistic industry is usually high, the number of firms entering it is low.As large firms supplying a sizable portion of a market, these companies have some control over the prices they charge. But there’s a catch: because products are fairly similar, when one company lowers prices, others are often forced to follow suit to remain competitive.

Eg. Automobile industry, Cable industry etc.

4. Perfect Competition

Perfect competition is a theoretical market where there are many sellers and products are identical in nature. There is no restriction to entry and exit for firms. All sellers are price takers. They cannot decide the price for their products. The price is decided by the demand and suppliers.Buyers have complete or "perfect" information—in the past, present and future—about the product being sold and the prices charged by each firm.

Eg. Foreign exchange markets