1. 1 - 0 What is finance Fields and jobs in Finance Forms of business organization Responsibility of financial staff in a corporation Goals of the corporation CHAPTER 1 An Overview of Finance

2. 1 - 1 Finance is the study of the flow of money Borrowing and Lending Financial institutions-the middle man Financial instruments-standard contact of borrowing/lending Financial markets What is Finance

3. 1 - 2 Money and Capital Market Markets and institutions that provide short and long term capital: Investment banks, banks, mutual funds, insurance companies, stockbrokers Regulators: Fed, SEC (security and exchange commission) Fields and jobs in Finance

4. 1 - 3 Investments Security analysis Portfolio management Market analysis Financial management (corporate finance) Fields and jobs in Finance

5. 1 - 4 Sole proprietorship Partnership Corporation Alternative Forms of Business Organization

6. 1 - 5 Advantages: Ease of formation Subject to few regulations No corporate income taxes Disadvantages: Limited life Unlimited liability Difficult to raise capital Sole Proprietorship

7. 1 - 6 A partnership has roughly the same advantages and disadvantages as a sole proprietorship. Partnership

8. 1 - 7 Why corporation? disadvantages Double taxation Cost of set-up and report filing Profit sharing

9. 1 - 8 Unlimited life Easy transfer of ownership Limited liability: why? Fairness and efficiency Ease of raising capital Capitalize future earnings into stock value today Advantages

10. 1 - 9 Investment and financing decisions Forecasting and planning Transactions in the financial markets Managing risk (insurance, hedging) Responsibilities of the Financial Staff

11. 1 - 10 The primary goal is shareholder wealth maximization, which translates to maximizing stock price. Goals of the Corporation