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Test Bank For Essentials of Corporate Finance, 2024 11th Edition All Chapters VERIFIED SOLUTIONS
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Test Bank For Essentials of Corporate Finance, 2024 11th Edition All Chapters VERIFIED SOLUTIONS
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Test Bank For Essentials of Corporate Finance,2024 11th Edition All Chapters VERIFIED
SOLUTIONS
why need to understand finance - not just competent in one area, must be familiar with
other business disciplines specially finance
Capital budgeting - deciding whether to expand a manufacturing plant
Captital Structure -
Four Basic Areas of Finance - Traditionally, financial topics are grouped into four main
areas:
Corporate finance (main subject of our course);
Investments;
Financial institutions;
International finance.
Corporate finance is the area of finance dealing with sources of funding and the capital
structure of corporations, the actions that managers take to increase a firm's value to
shareholders, plus tools and analysis used to allocate financial resources. - The term
"corporate finance" seems to imply that the topics studied are only related to
corporations, but in reality, those topics are much broader. That is why "business
finance" would be a little more descriptive term, as a lot of subjects discussed later in
the course are basic financial ideas and principles that apply across various areas of
finance and beyond
Investments area of finance deals with financial assets, such as stocks and bonds. -
Three fields of specialization in the area of investments are:
Financial advising and asset trading that is performed by stockbrokers and financial
advisors, who help their clients make financial decisions, e.g. what types of investments
to consider or what stocks to buy or sell;
Portfolio management that is performed by portfolio managers, who invest and manage
money for not only individual investors but also for pension funds, insurance companies
and other types of institutions;
Security analysis that is performed by financial securities analysts, who research
individual investments (e.g. stock in particular company) and make a determination if
the price is right;
, Financial advising and asset trading - that is performed by stockbrokers and financial
advisors, who help their clients make financial decisions, e.g. what types of investments
to consider or what stocks to buy or sell;
Portfolio management - that is performed by portfolio managers, who invest and
manage money for not only individual investors but also for pension funds, insurance
companies and other types of institutions;
Security analysis - that is performed by financial securities analysts, who research
individual investments (e.g. stock in particular company) and make a determination if
the price is right;
Major Areas of finance - Corporate, Investments, Financial Institutions, International
Finance
Corporate Finance - broadest area, inportant is all types, includes making decisions
regarding plant expansions to choosing what type of securities to issue when finance an
expansion
Investments - financial assets -stocks and bonds; study of investments two branches;
Portfolio management--money is manages for individuals; Security Analysis--research
of individual assets i.e. stock in particular company,determines whether priced correctly
Financial Institutions - Business that deal in financial matters; banks and insurance
companies
International Finance - investments made across non -us companies and oversea
operations which involves exchange wish and political risk
Why need to understand finance - marketers work w/ budgets, need the greatest payoff
from marketing expenditures and programs -- analyzing cost and benefits of all types is
one of the most vital aspects of finance
Why need to understand finance - accountants finance is required reading. accountants
are req to make financial decisions as well as perform traditional accounting duties
why need to understand finance - Important area in management is strategy..
management strategist must have clear understanding of the financial implications of
business plans
Financial institutions are basically businesses that primarily deal in financial matters,
such as banks, insurance companies, pension funds, etc. - Such institutions perform
wide variety of finance-related tasks, such as evaluating whether a certain business has
a strong enough financial position to extend a loan or deciding whether a particular risk
is suitable for insuring the business and what the premium should be.
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