BADM 7090 IA 2011 - Basic Concepts (Introduction to Finance)

BADM 7090 IA 2011 - Basic Concepts (Introduction to...

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BADM 7090 Financial Management Unit I.A Basic Concepts: Introduction to Finance Text material: GSM, Ch. 1 D. Chance
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Version: 1/3/11 D. Chance – BADM 7090 – Unit IA p. 2 of 22 Questions What are the basic concepts and ideas you need to know in finance? What do financial managers do? What is the appropriate objective of a business? What are the different forms of business organizations?
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Version: 1/3/11 D. Chance – BADM 7090 – Unit IA p. 3 of 22 What is Finance? Finance is the study of how financial resources are acquired and allocated in a business setting. Finance entails the study of Corporation finance – how companies make financial decisions Financial markets (stocks, bonds, currencies, derivatives) – how investors make decisions & how markets function Financial institutions – how financial institutions make decisions and their role in the financial system
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Version: 1/3/11 D. Chance – BADM 7090 – Unit IA p. 4 of 22 Important Concepts in Finance How capital investment decisions are made in a business How financial markets function How financial asset prices are determined How financing is acquired and dividend decisions are made The relationship between shareholders, the Board of Directors, and management
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Version: 1/3/11 D. Chance – BADM 7090 – Unit IA p. 5 of 22 Financial Instruments Financial instruments are claims issued by one party to another and represent ownership or indebtedness stocks bonds options variations and combinations of the above
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Version: 1/3/11 D. Chance – BADM 7090 – Unit IA p. 6 of 22 Financial Instruments (cont.) Financial instruments are also called financial assets . Contrast with real assets Note: all liabilities are financial liabilities
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1/3/11 D. Chance – BADM 7090 – Unit IA p. 7 of 22 Financial Markets A financial market is a facility in which buyers of financial instruments meet with sellers and negotiate prices for the exchange of these instruments.
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BADM 7090 IA 2011 - Basic Concepts (Introduction to...

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