1. What is finance?

Explain how this field affects the life of

everyone and of every organization. Finance is the science and art
of managing money. Because there are important financial dimensions to almost
any aspect of business, this field affects all of the activities.

1. What is the financial services area of finance? Describe

the field of managerial finance.
Financial services the area of finance concerned with the design and
delivery of advice and financial products to individuals, businesses, and
governments.

-Managerial finance is concerned with the duties of the financial manager

in a business. Financial Managers administer the affairs of all types of
business.

1. Which legal form of business organization is most

common? Which form is dominant in terms of business
receipts and net profits? Sole proprietorship is the most common
form of business (73%).

-Corporations account for nearly 90% of total business revenues

making them the dominant in terms of revenue.

1. Describe the roles and the basic relationship among the

major parties in a corporation--stockholders, board of
directors, and president. How are corporate owners
compensated?

Stockholders-the owners of a corporation, whose ownership, or equity,

takes the form of either common stock or preferred stock. They are
rewarded through dividends or residual claimants.

Board of Directors-Voted individuals who are typically responsible for

approving strategic goals and plans, setting general policy, guiding
corporate affairs, and approving major expenditures.
Managers-Managing day-to-day operations and carrying out the policies
established by the board of directors.

2. Why is the study of managerial finance important to your

professional life regardless of the specific area of
responsibility you may have within the business firm?
Why is it important to your personal life?
Managers in the firm, regardless of their job descriptions, usually have to provide
financial justification for the resources they need to do their job. This is why one must
be aware of managerial financing.