Finance 170


Introduction to Finance

Dr. Jerry Belloit


An Overview of Finance

uThe Study of Markets
and Institutions


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


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