BUS201 Lecture Notes - Lecture 6: Information Asymmetry, Arbitrage, Current Liability
23 Dec 2016
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Document Summary
Behavioural finance- study psychology of buyers and being aware of the biases. Information asymmetry- know a lot more about your proposed business than the people who are investors. Finance is a reflection of how healthy the business is. To be financially successful, come up with a product that everyone wants. Need to understand finance as not understanding finance could result in an unsuccessful business. Time value of money- (cid:272)are a(cid:271)out ho(cid:449) soo(cid:374) (cid:449)e get paid a(cid:374)d if it"s later, the(cid:374) (cid:449)e (cid:449)a(cid:374)t to (cid:271)e compensated. The typical person will want to avoid taking a risk, they will take the safer alternative. If your business plan is high risk, need to give a high return. Profits that an accountant might calculate is different from how someone in finance will calculate. When preparing the business plan and forecast, always start with sales then go down from there to expenses.
