Finance 170

 

Introduction to Finance

Dr. Jerry Belloit

 

An Overview of Finance

uThe Study of Markets
and Institutions

uInvestments

uCorporate Finance

The Financial System

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Financial System Plays a
Critical Role in the Life Cycle
of Individuals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Should the
Financial Manager Maximize Profits?

1.  Short-run decision making
2.  Ignoring risk

 

GOAL
of Financial Manager should be to:

 

Maximize Shareholder Wealth

 

 

Shareholder wealth
is maximized by:

 

 Maximizing Stock Price

 

 

Managers will not always maximize stockholders wealth because of

1.       Agency Costs

2.       Social Conscientiousness

 

 

Five Key Concepts of Finance

 

1.  Greater returns require greater risks

 

 

 

 

 

 

 

 

 

 


2.  Good deals disappear fast (also known as the “Theory of Efficient Markets”)

 

3.  The value of money depends upon when it is received

4.  Cash flows determine value

5.  Not everyone knows the same things