What are the three ways to measure financial capital according to the 1989 International Accounting Standards Board framework?
The first method treats capital as net assets measured in nominal monetary units. The second approach measures capital by purchasing power rather than raw numbers. The third concept defines capital as physical operating capacity.
How do lenders and businesses generate financial capital through interest and retained earnings?
Lenders provide financial capital at a price known as interest. Businesses also generate their own capital through retained earnings generated by operations over time.
What is the difference between productive capital, signaling capital, and regulatory capital based on operational function?
Productive capital includes assets necessary for daily business operations like inventory or cash flow. Signaling capital serves to project financial strength to shareholders and the broader market. Regulatory capital remains strictly maintained to fulfill mandatory requirements for financial institutions.
Which long-term sources of financing extend beyond seven years and what medium-term options span two to seven years?
Long-term sources usually extend beyond seven years and include share capital or mortgage loans. Medium-term financing typically spans between two and seven years using term loans or leasing arrangements.
How does modern fiat money differ from indigenous forms of money like wampum or shells regarding value storage?
Most indigenous forms of money like wampum or shells act only as symbolic storage rather than real value. Modern fiat money shares this characteristic of being a symbol backed by state military power.
Why does Marxist theory refer to finance capital as the determining ruling class interest in capitalist society?
Marxist theory refers to finance capital as the determining ruling class interest in capitalist society. Financial capitalism involves producing profit from manipulating financial capital rather than manufacturing goods.