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This 4 page Class Notes was uploaded by Tiarra Jensen on Monday August 31, 2015. The Class Notes belongs to FIL 240 at Illinois State University taught by Trefzger in Fall 2015. Since its upload, it has received 150 views. For similar materials see Business Finance in Finance at Illinois State University.
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Date Created: 08/31/15
Fil 240 Business Finance Teacher Joseph Trefzger Note taker Tiarra Jensen tiiens1ilstuedu Week 1 Anything emphasized during class discussion will have a next to it gt This bullet mark will signify any mathematical equations List of what chapters to read topics and homework can be found at his website httpswww5cobilstueduiwtrefzfil240 A calculator is needed for his class but it cannot be a graphing calculator Dav 1 August 18 2015 Exams are 96 of our grade in his class and there are 3 exams total Need to preprepare for his class and don t ever plan on leaving early he will use every minute that we are scheduled for class Topic 1 I What is Finance Obtaining and managing money Most important concept is risk and return It is closely related to accounting and economics Accounting aspect of finance is having financial statements and other tools for measuring financial values Economic aspect of finance is value maximization Analysts spend much of their time dealing in some way with debt and equity claims that constitute righthand side of Same co s balance sheet 11 Fields of study within finance Someone employed in the finance arena deals with one or more of the following fields A Investments proper selection of stocks bonds or other investments for households or organizations B Financial Intermediaries Management of banks insurance co s other firms that earn money by accepting financial risks that householdsother businesses do not want to bear C Real Estate AC sometimes called financial services D Business Finance Major Focus of Class How businesses obtain and spend money Main objective is maximizing wealth of coowners Key issues are capital structure firm gets money from lenders 111 Issues in Financial Management Primary job is to plan for acquire and utilize money for a firm Primary goal of financial managers should be to maximize value of firm Problems riskreturn tradeoff the time value of money Dav 2 August 20 2015 Investment Products 1 100 50 2 50 100 Total 150 150 They look the same but A Timing makes a difference BMoney sooner is better if you re getting a percentage back for holding it in a bank Let s assume they re getting a 3 interest rate back to them this is What it Will look like instead 1 100 50 2 53 1015 Total 153 1515 Now Business A looks like the better choice gt Revenue Expenses Profit for a discreet identified time period Stockholder unrest encouraged to take risks current price per share 50 gives me option to buy 60 per share Goes to 65 sales the 60 in shares for 65 Owners have residual claim no place to run and hide IV The capital formation process EX Ethical to give 50000 to truck delivering to school but bunji jumping is ethical too 1 Direct Transfers gt gtgt gt gtSecurities Stocks or Bonds gt gt gt gt lt lt lt lt lt lt lt lt lt D01131slt lt lt lt lt lt lt lt lt Business Savers 2 Indirect transfers through investment bankers gt gt gt gt gt gt gt gt gt gt gt gt gt gt gt gt gt gt gt gt gt gt gt gt gt Securities Securities Busmess Investment Bankmg Houses Savers Dollars Dollars lt lt lt lt lt lt lt lt lt lt lt lt lt lt lt lt lt lt lt lt lt lt lt lt lt 3 Indirect transfers through a Financial Intermediary gt gt gt gt gt gt gt gt gt gt gt gt gt gt gt gt gt gt gt gt gt gt gt gt gt Intermediary s Busmess Secur1t1es F1nanc1al I I Busmess Secur1t1es Savers Intermediar Dollars y Dollars eeeeeeeeeeeeeeeeeeeeeeeee Types of Ownership This should be a review Liquidity Liquid easily turned into cash Nonliquid not easy to turn into cash Lenders will not fully fund anyone because they do not want to be the last to be paid It s too risky There must always be a second lender in the back to take more of the risk
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