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Unformatted text preview: Why should a financial manager have an integrated understanding of the 5 basic finance functions? Why is the corporate governance function considered a finance function? Corporate finance can be defined generally as the science of managing money in a business environment, a more complete definition would emphasize that the practice of corporate finance involves five basic, related functions: financing, capital budgeting, financial management, corporate governance, and risk management. A financial manager needs to know all five basic finance areas because they all impact his or her job. Throughout the world, corporations raise capital by selling debt (bonds and notes) and equity (stocks) claims against themselves, either directly to investors or indirectly to financial intermediaries such as commercial banks. Financial managers then allocate these funds to the most attractive investment opportunities. These same professionals also manage the firm’s cash flows to ensure financial solvency and to minimize the resources needed to support a given level of corporate...
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This note was uploaded on 10/15/2011 for the course FIN 550 taught by Professor Smith during the Spring '11 term at Berklee.
- Spring '11
- Corporate Finance