Chapter 1 1. What is finance * Finance is the study of the flow of money * Borrowing and lending * Financial institutions-the middle man * Financial instruments and markets 2. Fields and jobs in finance * Money and capital market * Markets and institutions that provide short and long term capital: investment banks, banks, mutual funds, insurance companies, stockbrokers * Regulators: Fed, SEC (security and exchange commission) * Investments * Security analysis * Portfolio management * Market analysis * Financial management (corporate finance) 3. Forms of business organization * Sole proprietorship * Advantages: * Ease of formation * Subject to (受制于) few(很少) regulators * No corporate income taxes * Disadvantages: * Limited life * Unlimited liability * Difficult to raise capital * Partnership * Has roughly the same advantages and disadvantages as a sole proprietorship * Corporation * Advantages: * Unlimited life * Limited liability: why? * Fairness and efficiency * Ease of raising capital * Easy transfer of ownership * Capitalize future earnings into stock value today * Disadvantages (why corporation): * Double taxation * Cost of set-up and report filing * Profit sharing 4. Responsibility of financial staff * Investment and financing decisions * Forecasting and planning * Transactions in the financial markets * Managing risk (insurance, hedging两面下注) 5. Goals of the corporation * The primary goal is shareholder wealth maximization, which translates to maximizing stock price

Chapter 3 1. Income Statement * Measure of profitability利润率 over a period of time 2012 2011
Sales (Total revenue)
-Cost of Goods Sold (Cost of Revenue)
Gross Profit
-Expense
Earning Before