1. Describe the field of finance. How is it different from the field of accounting?

Finance is the act/process/study of managing money in such a way that you aquire and keep more money, and lose less of it. Finance is deciding what to do with the money you have. Accounting is figuring out how much money you have.

2. In a typical corporation the finance function is divided into two divisions, or departments. What are they? What does each department do?

In a typical corporation there are two divisions, Treasurer’s and Controllers offices that manage the finance function. The Treasurer’s Office is responsible for managing the firm’s cash and credit, its financial planning, and its capital expenditures. The Controller’s Office handles cost and financial accounting, tax payments, and management information systems.

3. What are the three forms of business generally encountered in the US? What are the main defining characteristics of each?

The three forms of business generally encountered within the US are: Sole Proprietorship – One individual owns everything, Partnership – Two or more persons jointly own everything, and Corporation – Owners may be any number of people who all own shares (stock) of the business.

4. What is the basic financial goal of a business?

The basic financial goal of a business is to maximize the wealth of the owners (stockholders in the case of corporations).

5. In the context of a corporation seeking to maximize the wealth of its owners, how is “wealth” defined?

The wealth of a corporation's owners is measured by how much their stock is worth.

6. What are the three main factors affecting the market price of a corporation’s stock? The three main factors affecting market price of stock are: Expected EPS - profits per share, Timing of Cash Flows -