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Chapter 1 New FIN201
Chapter 1 New FIN201
Chapter One
Ross Westerfield Jaffe 1
Sixth Edition
Anwar Zahid
Lecturer
Independent University, Bangladesh (IUB)
What is finance ?
Finance can be defined as the art and science of
managing fund.
interest rate, tax must fit into the financial manager decision
model and be applied correctly.
Occasional
Daily Profitability
• Stock Issue
• Credit Mgt. • Trade-
• Bond Issue
• Inventory mgt. Goal:
• Preferred off; Risk
• Receipt & Maximize
Disbursement of fund share - profit
Shareholder
• Capital wealth
budgeting
• Dividend
decision
Share Vs Bond
Definition
Return from share and bond is called !
Certainty of getting return !
Source of purchase: Stock exchange / Gov or public or private firms
Times of maturity:
Types of ownership: debt / equity
In terms of bankruptcy who will get the preference
first?
Voting right
Corporate Governance
The system of rules, practices and processes by
which a company is directed and controlled.
Corporate governance essentially involves balancing the
interests of the many stakeholders in a company - these include
its shareholders, management, customers, suppliers, financiers,
government and the community.
Corporation Financial
Market
More than 1 year
Capital Debt plus equity
market securities
Shares, Bonds
Quick Recap
What is Finance?
Types of Stocks
Bond
Difference between stock and bond
Dividend
Relationship to Economics
Relationship to Accounting
Goal of Firm
Stakeholders
Corporate Governance
See Next page
Types of Investors
The Agency Problem
Financial Institution
Financial Markets
The Money Market
The Capital Market
Dealer vs Broker
Business Taxes
Ordinary Income
Average vs Marginal Tax Rates
Interest vs Dividend Income
Capital Gains
End