fin 221 ch1 - F inance within an Organization The board of...

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Finance within an Organization The board of director : the top governing body, and the chairperson of the board is generally the highest-ranking individual. CFO : who is generally a senior vice president and the third ranking officer, is in charge of accounting, financing, credit policy, decisions regarding asset acquisitions, and investor relations, which involves communications with stockholders and the press. Sarbanes – Oxley Act : A law passed by Congress that requires the CEO and CFO to certify that their firm's financial statements are accurate. Finance : 1) Financial management 2) Capital markets 3) Investments
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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. Capital market : relate to the markets where interest rates, along with stock and bond prices, are determined. Also studied here are the financial institutions that supply capital to businesses. Investment : 1) Security analysis deals with finding the proper values of individual securities (i.e., stocks and bonds). 2) Portfolio theory deals with the best way to structure portfolios, or "baskets," of stocks and bonds. Rational investors want to hold diversified portfolios in order to limit risks, so choosing a properly balanced portfolio is an important issue for any investor. 3) Market analysis deals with the issue of whether stock and bond markets at any given time are "too high," "too low," or "about right." Forms of Business Organization There are four main forms of business organizations : (1) sole proprietorships (2) partnerships (3) corporations (4) limited liability companies (LLCs) and
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