Chap001 - Chapter 1 I ntr oduction to Cor por ate Finance...

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Unformatted text preview: Chapter 1 I ntr oduction to Cor por ate Finance Key Concepts and Skills • Know the basic types of financial management decisions and the role of the financial manager • Know the financial implications of the different forms of business organization • Know the goal of financial management • Understand the conflicts of interest that can arise between owners and managers • Understand the various types of financial markets 1-2 What is finance? • Finance is the study of how we allocate our assets over time in a risky world. • For an individual, it is the study of how we pay our bills today and invest for the future – The overall goal is maximizing our net worth, subject to the lifestyle we want to lead • For a corporation, it is the study of how they pay their bills and how they choose to invest in future projects – The overall goal is maximizing the stock price of the company Corporate Finance • Some important questions that are answered using corporate finance – What long-term investments should the firm take on? (Capital budgeting) – Where will we get the long-term financing to pay for the investment? (Capital structure) – How will we manage the everyday financial activities of the firm? (Working capital management) What long-term investments should the firm take on?...
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Chap001 - Chapter 1 I ntr oduction to Cor por ate Finance...

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