Exam (elaborations)
ESSENTIALS OF CORPORATE FINANCE FULLY EXPLAINED #19
- Module
- CORPORATE FINANCE
- Institution
- CORPORATE FINANCE
ESSENTIALS OF CORPORATE FINANCE FULLY EXPLAINED #19
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ESSENTIALS OF CORPORATE FINANCE FULLY EXPLAINED #19Major Areas of finance - correct answer Corporate, Investments, Financial Institutions,
International Finance
Corporate Finance - correct answer 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 - correct answer 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 - correct answer Business that deal in financial matters; banks and
insurance companies
International Finance - correct answer investments made across non -us companies
and oversea operations which involves exchange wish and political risk
Why need to understand finance - correct answer 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 - correct answer accountants finance is required
reading. Accountants are req to make financial decisions as well as perform traditional
accounting duties
Why need to understand finance - correct answer Important area in management is
strategy.. Management strategist must have clear understanding of the financial
implications of business plans
Why need to understand finance - correct answer not just competent in one area, must
be familiar with other business disciplines specially finance
Capital budgeting - correct answer deciding whether to expand a manufacturing plant
Captital Structure - correct answer
Four Basic Areas of Finance - correct answer 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. - correct
answer 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. -
correct answer 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 - correct answer 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 - correct answer 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 - correct answer 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 institutions are basically businesses that primarily deal in financial matters,
such as banks, insurance companies, pension funds, etc. - correct answer 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.
International finance isn't so much an area of finance as it is a specialization within one
of the areas described above, i.e. It generally involves international aspects of either the
corporate finance or investments or financial institutions. - correct answer For example,
some portfolio managers and security analysts specialize in non-US companies. Many
financial institutions in US have extensive overseas operations and have to evaluate
their exposure to currency exchange rates fluctuations and the political risk.
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