Artica, Sandy Mae, D.

FINMA 3100
BSAC 3-1 1st Sem. A.Y. 2020-2021

ACTIVITY 2
THEORIES, CONCEPTS & PRINCIPLES IN MY PREVIOUS FINANCE SUBJECTS

As I continue to learn more regarding finance subjects, do not forget that is important to
learn first the theories, concepts and principles behind this. So the following are some information
that made an impact on me the most.
The theory that made an impact on me is the ‘Agency Theory’. It is a theory about the
managers and the shareholders. Agency relationships arises whenever one or more persons,
also called ‘principals’ hire one or more persons, also called agents, to render some service then
appoint decision-making authority to the so-called agents. This relationship does not mean a
harmonious one, it sometimes results conflicts, also called agency conflicts. This conflict is with
regards to the interest between the two parties. The goals of the said parties sometimes
inconsistent with each other.
The concept that made a great impact on me is the concept of ‘Budgeting’. As a student,
it is necessary to spend for education as well as to save for future purposes. Budgeting serves as
a tool to do that, by doing so I save more than I could ever did and I only spend for the list of my
priorities. Additionally, budgeting allows me to project my budget for incoming weeks or even a
month, efficiently and effectively.
The principle that made an impact on me is the principle of ‘Time Value of Money’. It says
that, “A dollar received today is worth more than a dollar received a year from now“, meaning
today, we can earn more interest on money received rather than to earn later. As the value of
money nowadays shows that it is true. As years passed by, value of money continue to reduce.