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1、Introduction to Financial Management,Chapter 1,1,Introduction to Financial Mana,Chapter Outline,Finance: A Quick LookFinancial ManagerForms of Business OrganizationThe Goal of Financial ManagementThe Agency Problem and Control of the CorporationFinancial Markets and the Corporation,2,Chapter Outline
2、Finance: A Quic,Basic Areas Of Finance,Corporate financeInvestmentsFinancial institutionsInternational finance,3,Basic Areas Of FinanceCorporat,Investments,Work with financial assets such as stocks and bondsValue of financial assets, risk versus return and asset allocationJob opportunitiesStockbroke
3、r or financial advisorPortfolio managerSecurity analyst,4,InvestmentsWork with financial,Financial Institutions,Companies that specialize in financial mattersBanks commercial and investment, credit unions, savings and loansInsurance companiesJob opportunities,5,Financial InstitutionsCompanie,Banks i
4、n China,Central bank: PBC ruling rate of interest; treasury; foreign reserve; settlementThree policy banks: The export-import bank of China; China development bank; Agriculture development bank of ChinaFour state-owned banks: CBC(CCB); BC; ABC; ICBCStock-holding banks:,6,Banks in ChinaCentral bank:
5、PB,Former five top investment banks,Goldman SachsMorgan StanleyLehman Brother Merrill LynchBear Steam,7,Former five top investment ban,International Finance,This is an extended area of the above areas discussed in the international scope.It may allow you to work in other countries or at least travel
6、 on a regular basisNeed to be familiar with exchange rates and political riskNeed to understand the customs of other countries and speaking a foreign language fluently is also helpful,8,International FinanceThis is a,Financial management,Some important questions that are answered using financeWhat l
7、ong-term investments should the firm take on?Where will we get the long-term financing to pay for the investment?How will we manage the everyday financial activities of the firm?,9,Financial managementSome impor,Financial Manager,Financial managers try to answer some or all of these questionsThe top
8、 financial manager within a firm is usually the Chief Financial Officer (CFO)Treasurer oversees cash management, credit management, capital expenditures and financial planningController oversees taxes, cost accounting, financial accounting and data processing,10,Financial ManagerFinancial man,Financ
9、ial Management Decisions,Capital budgeting (investment decision)What long-term investments or projects should the business take on?Capital structure (financing decision)How should we pay for our assets?Should we use debt or equity?Working capital managementHow do we manage the day-to-day finances of
10、 the firm?,Long-term decisions,Short-term decisions,11,Financial Management Decisions,Forms of Organization,Three major forms in the united statesSole proprietorshipPartnershipGeneralLimitedCorporationLimited liability company,“Big four”,12,Forms of OrganizationThree maj,Sole Proprietorship,Advantag
11、esEasiest to startLeast regulatedSingle owner keeps all the profitsTaxed once as personal income,DisadvantagesLimited to life of ownerEquity capital limited to owners personal wealthUnlimited liabilityDifficult to sell ownership interest,13,Sole ProprietorshipAdvantagesD,Partnership,AdvantagesTwo or
12、 more ownersMore capital availableRelatively easy to startIncome taxed once as personal income,DisadvantagesUnlimited liabilityGeneral partnershipLimited partnershipPartnership dissolves when one partner dies or wishes to sellDifficult to transfer ownership,14,PartnershipAdvantagesDisadvant,Corporat
13、ion,AdvantagesLimited liabilityUnlimited lifeSeparation of ownership and managementTransfer of ownership is easyEasier to raise capital,DisadvantagesSeparation of ownership and managementDouble taxation (income taxed at the corporate rate and then dividends taxed at personal rate),15,CorporationAdva
14、ntagesDisadvant,Goal Of Financial Management,What should be the goal of a corporation?Maximize profit?Minimize costs?Maximize market share?Maximize the current value of the companys stock?Does this mean we should do anything and everything to maximize owner wealth?,16,Goal Of Financial ManagementWh,
15、The Agency Problem,Agency relationshipPrincipal hires an agent to represent their interestStockholders (principals) hire managers (agents) to run the companyAgency problemConflict of interest between principal and agentManagement goals Agency cost: direct cost and indirect cost,17,The Agency Problem
16、Agency relat,Managing Managers,Managerial compensationIncentives can be used to align management and stockholder interestsThe incentives need to be structured carefully to make sure that they achieve their goalCorporate controlProxy fightThe threat of a takeover may result in better management. case
17、Other stakeholders,18,Managing ManagersManagerial co,Case of takeover,Case 1: hostile takeoverAcquiring firm: ShengdaTarget firm: Sina2005.2,19.5% acquisition on Nasdaq2005.3, anti-takeover: poison pill( shares dilution plan ) 19.5%-2.28%Come to a deadlockCase 2:Acquiring firm: Group DanoneTarget fi
18、rm: WahahaJoint contribution from 1996: Danone 51%; Wahaha 49%Bid a price: 4 billion Rmb2009 settle out of court: Danone 51% shares sold for 0.3 billion Euros,19,Case of takeoverCase 1: hostil,Financial Markets,Cash flows to the firmClassification:1. Financing period: currency market;capital market2
19、. Trading object: spot market; futures market; option3. The first issue of security: primary;secondary marketsSecondary market: dealer vs. auction marketsAuction: physical place; centralized bidding; three priority example: NYSEDealer :no physical place;OTC trasaction example:NASDAQ,20,Financial Mar
20、ketsCash flows to,Figure 1.2,21,Figure 1.221,Quick Quiz,What are the four basic areas of finance?What are the three types of financial management decisions and what questions are they designed to answer?What are the three major forms of business organization?What is the goal of financial management?What are agency problems and why do they exist within a corporation?,22,Quick QuizWhat are the four ba,
