BUS 320 Lecture Notes - Lecture 1: Credit Default Swap, Sole Proprietorship, Disinflation
6 May 2020
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Document Summary
Chapter 1 - the goals & activities of financial management. Economics provides broads pictures of economic environments for decision making. Finance links economic theory with accounting numbers. New financial products focusing on hedging are now widely used. Inflation (increase of prices) - key variable in financial decisions. Disinflation (a slowing down of price increases) Required rates of return for capital budgeting decisions. Risk management and a review of the financial crisis. Losses from credit defaults in excess of banks" capital in many cases. Creation of complicated, unregulated financial products ike credit default swaps (cds) Financial management concerned with managing entity"s money. It"s important investors have confidence in the company and the market. Allocate funds to current and fixed assets. Develop appropriate dividend policy within the context of firm"s objectives. Day-to-day credit management, inventory control, and receipt and disbursement of funds. Risk-return trade-off determined to maximize the market value. Influences operational side (capital vs. labor or product a vs.
