Wednesday, July 7, 2010

Chapter 1 study guide

INTRODUCTION TO FINANCIAL MANAGEMENT

NOTE: You can just skim sections 1.11 - 1.13 (pp.31-42).  These sections are much more investment related.

Topical Review
  • Describe the differences, advantages, and disadvantages of various forms of business organization (partnership, corporation, etc.)
  • Define the goal of corporations and criticize/defend this objective
  • Generally list the major determinants of stockholder value
    • Timing of future cash flows (revenue, expenses, required investment)
    • Risk of cash flows
    • Cost of provided funds
  • List the items that impact a company's cost of funds
  • Differentiate primary and secondary market transactions and explain the role of financial intermediaries such as banks
Definitions
  • Forms of business organization: proprietorship, partnership, corporation, limited liability
  • Financial markets: primary market, secondary market, direct transfer, financial intermediary, initial public offering, seasoned offering, investment bank

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