Corporate Finance

1) Finance – providing and utilizing the money
2) Business Finance – means rising, providing and managing of all money to be used in.
3) Financing – means rising of funds or collecting of funds with a minimum cost.
4) Goals of financial manager – 1) Profit maximization 2) Shareholders wealth maximization.
5) Financial system – is the collection of markets, individuals, institutions, laws, regulations and techniques through which bonds, stocks and other securities are traded.
6) Market—it is a location where buyers and sellers meet to exchange goods and services.
7) Types of market – 3 types – Factor, Product and Financial market.
*) Factor market – is the market which allocate factor of production – land, labor, management skill, capital and distribute income.
*) Product market – is the market where consuming units purchases goods and services for consuming and make payment for them.
*) Financial market – is an institutional set up created by society to channel savings and other financial services to those individuals and institution willing to pay for them.
8) Savings—savings are what is left from current income after consumption, expenditure and tax payment.
9) Investment – means future of fund to raise capital to produce goods and services and future production to raise income.
10) Debt market – it is the market where debt instrument are traded (loan, debt, debenture). It represents creditor ship.
11) Equity market— it is the market where stocks of corporation are traded. It represents ownership right.
12) Money market – where short term loans are traded (1 year or less)
13) Capital market – where long term loans are traded (more than 1 year)
14) Primary market – is the market where newly issued loans and securities are traded.
15) Secondary market – where existing issued loans and securities are traded.
16) Open market