Assume that you recently got a job as an investment analyst and your boss has developed the following set of questions you must answer to explain the U.S. financial system to one of your firms clients.

1. What three aspects of cash flows affect the value of any investment?
2. What are free cash flows?
3. Who are the providers (savers) and users (borrowers) of capital? How is capital transferred between savers and borrowers?
4. What do we call the cost that a borrower must pay to use debt capital? What two components make up the cost of using equity capital? What are the four most fundamental factors that affect the cost of money, or the general level of interest rates, in the economy?
5. What are some economic conditions that affect the cost of money?
6. What are financial securities? Describe some financial instruments.
7. List some financial institutions.