11S.02.introduction- - FIN 600 Lecture 2 Introduction to Corporate Finance Dr Zhipeng(Alan Yan Chapter Outline 1.1 What is Finance 1.2 The

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FIN 600 – Lecture 2 Introduction to Corporate Finance Dr. Zhipeng (Alan) Yan
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Chapter Outline 1.1 What is Finance? 1.2 The Corporate Firm 1.3 The Importance of Cash Flows 1.4 The Goal of Financial Management 1.5 The Agency Problem and Control of the Corporation 1.6 Regulation
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What is finance? ± Examples ² HP bought 3PAR for $2.1 billion. ² GM ponders over building more trucks or sedans? ² Microsoft pays out cash as dividend? ± Every business is a process of acquiring and disposing assets: - Real assets : land, machines, knowledge, etc; - Financial assets : bond, stock, options… ± Financially, a business decision reduces to - Valuation of assets. - Management of assets. ± Valuation is the central issue of finance, i.e., determining the prices of assets.
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Types of Business Organizations ± Three basic forms of a firm: ² Sole Proprietorship ² The Partnership ± General Partnership ± Limited Partnership ² The Corporation ± The corporate form of business is the standard method for solving the problems encountered: ² in raising capital, and ² in distributing risk
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A Comparison: corporation vs. partnership Corporation Partnership Liquidity Shares can be easily exchanged Subject to substantial
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This note was uploaded on 03/18/2011 for the course FIN 615 taught by Professor Yan during the Spring '11 term at New York Institute of Technology-Westbury.

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11S.02.introduction- - FIN 600 Lecture 2 Introduction to Corporate Finance Dr Zhipeng(Alan Yan Chapter Outline 1.1 What is Finance 1.2 The

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