Chapter 1 - 1-1About This CourseInstructor Yea-Mow Chen Professor of FinanceCourse Finance 350 Spring 2011Course Materials Course materials will be

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Unformatted text preview: 1-1About This CourseInstructor: Yea-Mow Chen, Professor of FinanceCourse: Finance 350, Spring 2011Course Materials: Course materials will be posted on iLearn, including syllabus, lecture notes, supplementary readings, announcements, and othersHomework assignments will be posted on a regular basisSample exams will also be postedE-mail me anytime if you have questions about the course and others 1-2About This CoursePrerequisites:Mathematics: Finance uses lots of arithmetic, because questions are often about dollars and cents. But we only use simple Algebra, no integrals, no linear algebra, vectors, and matrices, much less real algebra.Mathematical aptitudedoes help, and tremendously so. The reason is that it makes working with numbers and formulas easier. With good attitude and work, everyone can do well. Without it, you will fail.Statistics: Means and variances, basic covariances, correlations, line-fitting (linear regression).Accounting: basic financial statement concepts, especially net income calculations and financial ratio analysis.Economics: Basic demand and supply and equilibrium concepts.1-3About This CourseFour Things to Do Well for the Course:1. Read topical chapter before each class;2. Come to class. Bring in a calculator and printouts of handout;3. Do the homework problems, by yourself;4. Read topical chapter after class again.1-4CHAPTER 1An Overview of Financial ManagementFinancial Management is about Creating Value What Financial Decisions will you Make as a CFO?Stock Prices and Intrinsic ValueAgency Relationships: Conflicts between Shareholders and Managers1-5CHAPTER 1An Overview of Financial ManagementWhy you want to set up a Business or a Corporation? What is your goal?To make profits to the largest extent – maximize the value of the business or the corporationTo make your dream come trueTo do good for the society – Corporate Social ResponsibilitiesAt the end, corporate firms have to be profitable to remain in businessBut there is still a question on maximizing the profits of a corporation, for whom? Executive managers, employees, stockholders, or other stakeholders?1-6CHAPTER 1An Overview of Financial ManagementThe Objectives of the Firm:In traditional corporate finance, the objective in decision making is to maximize the value of the firm.A narrower objective is to maximize stockholder wealth. When the stock is traded and markets are viewed to be efficient, the objective is to maximize the stock price.1-7CHAPTER 1An Overview of Financial ManagementTo make the value of a corporation maximum, which requires the managers to make financial decisions: The Investment Decision - Invest in assets that earn a return greater than the...
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This note was uploaded on 11/11/2011 for the course FIN 350 taught by Professor Chen during the Spring '07 term at S.F. State.

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Chapter 1 - 1-1About This CourseInstructor Yea-Mow Chen Professor of FinanceCourse Finance 350 Spring 2011Course Materials Course materials will be

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