An introduction to financial institutions, investments & Management Basic Finance 1 An introduction to financial institutions, investments & Management Eleventh Edition By Herbert B. Mayo
The Divisions of the Finance Discipline Institutions Investments Corporate (business) finance
Key Financial Concepts Sources of finance Debt Equity Sources of return Income Price appreciation Risk the uncertainty that the expected return will not be achieved
Key Financial Concepts Financial leverage: the use of borrowed funds Valuation Determination of what an asset is currently worth Goal of management: maximization of shareholder value
Assumptions Analysis is built on assumptions. Text illustrations employ assumptions.
Finance and Other Business Disciplines Finance studied from A business perspective An individual’s perspective Valuation of securities Portfolio construction