Management and Organizational Studies 1023A/B Study Guide - Midterm Guide: Net Present Value, Proxy Voting, Stock Market

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 1023A/B
• Professor: Barry Hawn

Document Summary

Finance: the study of how and under what terms savings (money) are allocated between lenders and borrowers. Rms exist to create value/wealth for the owners (they don"t exist to bene t everybody - just the owners) Maximizing the price of the existing common stock: good nancial decisions will help increase stock price and poor nancial decisions will lead to a decline in stock price. Three basic issues addressed by the study of nance: what long-term investments should the rm undertake? (capital budgeting decision) New computer software, business expansion, expand in new country: how should the rm raise money to fund these investments? (capital structure decision) Companies raise money through selling stock, or raising debt: how to manage cash ows arising from day-to-day operations? (operating decision) Companies can grow so fast that they blow up. When people in nance make decisions, cash ows are the only thing that matters (accounting information doesn"t matter)