FINC 341 Chp 1 notes

FINC 341 Chp 1 notes - Finance341Chapter1Outline

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Finance 341 Chapter 1 Outline Finance grew out of Economics and Accounting Organizational Structure : o The board of directors is the top governing body, and the chairperson is the  highest rank Chairperson:  responsible for the firm’s strategic policies Compensation Committee : three outside directors who set the  compensation package for the senior officers; they use factors such as  stock price performance relative to the market as well as other firms  within the industry, EPS growth rate, and other firms’ compensation  packages o Next in line is the CEO, but many times the chair and CEO are the same person o Then after that is the COO and CFO COO : directs the firms marketing, manufacturing, sales, and other  operating departments CFO : in charge of accounting, financing, credit policy, decisions regarding  asset acquisition, and investor relations. Finance is generally divided into three areas:  o Financial management : focuses on decisions relating to how much and what  types of assets to acquire, how to raise the capital needed to buy assets, and  how to run the firm so as to maximize its value o Capital Markets : relate to the markets where interest rates, along with stock and  bond prices, are determined o Investments : relate to decisions concerning stocks and bonds and include a  number of activities: Security Analysis : deals with finding the proper values of individual  securities
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Portfolio Theory : deals with the best way to structure portfolios of stocks  and bonds Market Analysis : deals with the issue of whether stock and bond  markets at any given time are too high, too low, or about right. There are four main forms of Business Organizations
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This note was uploaded on 11/04/2009 for the course FINC 341 taught by Professor Guyton during the Spring '07 term at Texas A&M.

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FINC 341 Chp 1 notes - Finance341Chapter1Outline

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