Finance Chp 1

  1. Name the four basic areas and what they do?
    • 1. Corp Finance - financial statement, analysis, cash flow, budgeting
    • 2. Investment - rate pricing , risk and reward, portfolio mgmt
    • 3. financial Institutions - banks, credit unions, insurance co, stock and bonds brokage, real estate, investment banks
    • 4. International Finance - currency exchange rates, international loans, currency valuation
  2. Name FINC Management Titles?
    • CFO, controller, comptroller (old english), financial analysis, financial advisor, financial manager, cpa
    • wealth manager, treasurer
  3. Capital structure theory?
    the mixture of debt and equity in a company
  4. Define "stand by line of credit"?
    • Just like a charge card. They can call up anytime
    • to get more money.
  5. Define  - Commitment Fee?
    Banks get a "Commitment Fee" just to keep the money of the reserve for Mc
  6. Capital budgeting for?
    long term assets - such as land, plant, equipment
  7. Working capital management
    for short term assets  - such as cash, inventory, accounts receivables, marketable securities
  8. Name 3 forms of business organization?
    • Proprietorship - about 75% of the existing 21 million - 6% of sales - 27% of national profit - Unlimited Liability
    • Partnerships - 6% - 4% of sales - 3% of national profit - Shared Liabilty
    • Corporations - 19% - 90% of sales - 70% of national profit - No Liabilty (* value of stock could be a Liabilty)
  9. When was the Period of Economic Expansion?
    • Early 1900's:  - Mergers, acquisitions, creation of new financial instruments (documents)
    • there was alot of oil and steel, plants were starting up,
  10. what yr was the The Great Depression?
    1930 - Preservation of capital, liquidity management, reorganization
  11. what happened in 1950?
    • Post WW 2 - expansion of college education resulting from "GI bill" educational benefits
    • - GI Bills also provided low mortgage rates.
  12. what is our current state called?
    Capital structure Theory, Globalization
  13. Goals of financial Management:
    • - Maximize current value per share of stock. * The top reason!!
    • - Profit
    • - Maximize Profit
    • - Survival out of a recession
    • - Expansion
    • - Beat the competition
    • - Increase market share
    • - Minimize expenses
    • - Steady Earnings growth
  14. Two reasons for owning stock ?
    • 1. Dividends
    • 2. Capital appreciation - ex) buy at $10 per share and see it at go to $20 per share
  15. define  Relationship of financial Management?
    • Working relationship in which the principal is represented by an agent to act on their behalf
    • must focus on the shareholders is top priority for the company
    • Ex)Ford in 2006 hired Alan Mulally as CEO , 23.6 billion dollar loan.
  16. define stakeholder?
    anyone that has an interest in the operation of that company
  17. Define the financial Markets  all 8 of them?
    • financial Markets - 8 of them
    • 1. Money market - financial instruments / docs with a materity less than one yr. such as a treasury bill
    • 2. Capital market - financial instruments with a materity greater than one yr. such as treasury bond
    • 3. Private market - The original sale of a financial instrument from Issuer to investor
    • 4. Secondary market - all subsequent sale of a financial instrument
    • 5. Private market - the offer for sale is made to one or to a very small num of investors . Ex) ferris and IBM purchase
    • 6. Public market - the offer for sale is made to many num of investors (The public)
    • 7. Spot market - the sale of a financial instrument at the then current market price, for immediate delivery. (usually commodities like oil for refineries)
    • 8. Futures market - the sale of a financial instrument at the price set today, for the delivery at a future date.
Author
bvrider1
ID
334074
Card Set
Finance Chp 1
Description
Covers chapter one notes from class
Updated