The Four Basic Areas of Finance Investments Financial Institutions International Finance

1. The Four Basic Areas of Finance • Investments • Financial Institutions • International Finance • Corporate Finance Introduction – Fin301

2. Investment • What kinds of investment tools we have? • How to issue new securities? • Security Markets • Listing and listing requirements • NYSE is a dealer market or an auction market? • What do Investment banks do? • Goldman Sachs, Merrill Lynch, JPMorgan, Lehman Brother, Saloman Smith Barney, Morgan Stanley • Investment banking: Underwrites IPOs, SEOs, places private equity ... • Brokage Service: execute security transaction, offers M&A advisory services ... Introduction – Fin301

3. Financial Institutions • Commercial Banks • Savings institutions • credit unions • mutual funds • insurance companies • pension funds Introduction – Fin301

4. International Finance • Foreign Exchange Risk • Political Risk • Terms like LIBOR, EURO, Eurodollar • What would be the impact on Japanese products if Yen Strengthens against Dollar? Introduction – Fin301

5. Corporate Finance Introduction – Fin301

6. Organization Chart Introduction – Fin301

7. Corporate Objective??? Introduction – Fin301

8. Financial Managers’ Decisions • Investment Decisions • Financing Decision • Capital Budgeting • Capital Structure • Working Capital • Risk Management Introduction – Fin301

9. To Maximize shareholders’ wealth, managers should learn / know • Calculate cash flow • timing of cash flow • risk of cash flow • tax treatment of cash flow • financing of investment • options to undertake future actions Introduction – Fin301

10. The Agency Problem • The agency relationship • Agency Costs • How do agency costs affect firm value • Any problem other than the agency problem? Introduction – Fin301