Chapter Essay

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Basic Areas Of Finance 1. 2. 3. 4. Corporate finance = Business Finance Investments Financial institutions International finance Return to Quick Quiz 1-1 Investments • Work with financial assets such as stocks and bonds • Value of financial assets, risk versus return, and asset allocation • Job opportunities – Stockbroker or financial advisor – Portfolio manager – Security analyst 1-2 Financial Institutions • Companies that specialize in financial matters – Banks – commercial and investment, credit unions, savings and loans – Insurance companies – Brokerage firms • Job opportunities 1-3 International Finance • An area of specialization within each of the areas discussed so far • May allow you to work in other countries or at least travel on a regular basis • Need to be familiar with exchange rates and political risk • Need to understand the customs of other countries; speaking a foreign language fluently is also helpful 1-4 Basic Areas Of Finance INTERNATIONAL DOMESTIC Corporate Finance Financial Institutions Investments 1-5 Why Study Finance? • Marketing – Budgets, marketing research, marketing financial products • Accounting – Dual accounting and finance function, preparation of financial statements • Management – Strategic thinking, job performance, profitability • Personal finance – Budgeting, retirement planning, college planning, day-to-day cash flow issues 1-6 Business Finance • Some important questions that are answered using finance – What long-term investments should the firm take on? – Where will we get the long-term financing to pay for the investments? – How will we manage the everyday financial activities of the firm? 1-7 Financial Manager • Financial managers try to answer some, or all, of these questions • The top financial manager within a firm is usually the Chief Financial

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