Overview
Please review all three Articles, and provide a general review of the students response to the article. Three Articles: 100 - 150 words per article.
Article 1
In the U.S. economy, financial institutions play a vital role in moving money between savers, investors, and borrowers, as Brigham and Ehrhardt explain in their 2020 text Financial Management: Theory and Practice.
Depositary institutions, such as banks and credit unions, support everyday financial needs by accepting deposits and providing loans. They help individuals and businesses manage cash flow and gain access to short-term funding. These institutions are active in the money market, where short-term lending occurs, and the interbank market, where banks lend reserves to each other. They also operate in the spot (cash) market, which handles immediate payments and currency exchanges. While their focus is mostly short-term, they may also participate in capital markets through longer-term lending and investments.
Contractual institutions, including insurance companies and pension funds, collect regular payments and invest those funds to meet long-term obligations. Brigham and Ehrhardt describe how these institutions are closely tied to the capital market, buying new securities in the primary market and managing portfolios by trading in the secondary market. When they need flexible or specialized contracts, they often turn to the OTC (over-the-counter) market.
Investment institutions, such as mutual funds and hedge funds, gather money from individual investors to invest across various assets. They are heavily involved in the capital markets, including both primary and secondary markets. In addition, they use the derivatives market to manage investment risk with tools like options and futures, and they participate in the Forex market to trade foreign currencies. These institutions also frequently use OTC markets for private or customized trades.
These institutions play distinct but connected roles. Depositary institutions serve money, interbank, and spot markets; contractual institutions focus on capital, primary, secondary, and OTC markets; and investment institutions operate across most markets to manage and grow funds.
-Kathleen
Brigham, E. F., and Ehrhardt, M. C. (2020). Financial management: Theory and practice [with MindTap] (16th ed.). Cengage Learning. ISBN-13: 9780357252680
Article 2
Home Depot is one of the biggest construction company that has a value of $345 billion. Home Depot is a company that likes to outbid or buy it’s competitors to eliminate the competition. In this article, Home Depot is attempting to buy the distributor GMS. Home Depot encountered a hiccup because there is another firm that is trying to but GMS, and it gave GMS a higher bid than what Home Depot is initially trying to buy it for.
I think Home Depot is trying to buy GMS with Market Value because that’s what it is worth and adding GMS’ debt as well. I think Home Depot’s offer is pretty fair and that it is not trying to bid in the low end to get a higher return down the road. I do think that if this becomes a bidding war, the shareholders should go for the highest bid depending on what kind of company they fall under. Are they a company that is only focused on financial gain, or is it a company focused on financial gain and the benefits of its shareholders and employees?
-Kristina
Thomas, L. (2025, June 19). Home Depot Bid Kicks Off Battle for $5 Billion Building-Products Company. Wall Street Journal. https://www.wsj.com/business/deals/home-depot-bid-...
I recently read a Wall Street Journal article about Apple Inc., which is a great example of a publicly traded company with a large shareholder base (Mickle, 2024). Apple has made ethics a key part of its financial management, especially when it comes to transparency and responsible sourcing. For instance, Apple regularly publishes reports on its supply chain practices and has strict guidelines to ensure suppliers follow ethical labor and environmental standards.
One of the main challenges Apple faces is balancing the pressure to keep costs low and profits high with the need to maintain ethical standards. There have been times when the company has faced criticism over working conditions at supplier factories. Despite this, Apple has responded by increasing audits and being more transparent about its efforts to improve conditions, even if it means higher costs in the short term.
From a financial manager’s perspective, there’s a fiduciary duty to maximize shareholder wealth. However, Apple shows that ethical practices can support long-term value. By building trust with customers and investors through ethical behavior, Apple helps protect its brand and reduce risks that could hurt shareholder value in the future. Even when there’s pressure to cut corners, Apple’s commitment to ethics helps sustain its reputation and long-term profitability (Mickle, 2024).
Reference:
Mickle, T. (2024, March 15). Apple’s Supply Chain Ethics: Balancing Profit and Responsibility. The Wall Street Journal.