________1. The basic objective of financial management is to achieve optimal profit, both in the short and long run.

________2. The primary goal of financial management is ensuring an organization’s survival. As the term suggests,
businesses need to survive the competitive market and the best way to do so is to manage their financial resources.

________3. Effective mobilization is one of the most important objectives of the financial function. It means that
managers need to make decisions regarding the allocation and utilization of various funds/.

________4. Proper utilization of finance also encourages proper distribution. From creating inventories to investing in
profitable businesses, mobilization and utilization of finances lead to better business decisions.

________5. As financial managers prepare the capital structure, It creates balance among different sources of capital.

FOUR COMPONENTS: PLANNING, ORGANIZING, DIRECTING AND CONTROLLING.

WHAT IS FINANCE? There’s no actual definition for finance but they describe it as a study of money, investing.

COO and CFO must be registered at SEC and their statement must be accurate.

FINANCIAL MANAGEMENT- Also called corporate finance focuses on decisions relating to how much and what types of
assets to acquire, how to raise the capital needed to buy assets, and how to run the firm so as to maximize its value.

CAPITAL MARKETS- Relate to the markets where interest rates, along with stock and bond prices, are determined. Also
studied here are the financial institutions that supply capital to businesses.

INVESTMENTS- relate to decisions concerning stocks and bonds and include a number of activities. (1) security analysis
deals with finding the proper values of individual securities (i.e stocks and bonds).

WEEK 2

INVESTING- Long term

TRADING- Short term

INTRINSIC VALUE- a measure of what an asset is worth less liability.

MARKET PRICE- The stock value based on perceived but possibly incorrect information as seen by the marginal investor

MARKET VALUE- yung value.

FORMULAS

MARKET VALUE FORMULA : CURRENT MARKET PRICE PER SHARE X TOTAL OUTSTANDING SHARE

SHAREHOLDER’S WEALTH FORMULA: EXISTING SHARES X CURRENT MARKET PRICE PER SHARE

RATE OF RETURN FORMULA: CURRENT VALUE-ORIGINAL VALUE/ORIGINAL VALUE X 100

 TYPES OF FINANCIAL MARKETS

PHYSICAL ASSET MARKET- Tangible

FINANCIAL ASSET MARKET- Intangible

SPOT MARKET- on the spot

FUTURE MARKET- Future date

MONEY MARKET- Short term debt

CAPITAL MARKET- Long term debt

PRIVATE MARKET- worked with two parties

PUBLIC MARKET- Traded on organized exchanges

FINANCIAL INSTITUTIONS

INVESTMENT BANKS- organization that underwrites and distributes new investment securities and helps businesses
obtain financing

COMMERCIAL BANK- Traditional department store of finance serving a variety of savers and borrowers

LIFE INSURANCE COMPANIES- takes savings in the form of annual premiums; invest these funds in stocks, bonds, real
estate, and mortgages; and make payments to the beneficiaries of the insured parties.

MUTUAL FUNDS- organizations that pool investor funds to purchase financial instruments and thus reduce risks through
diversification

DIRECT TRANSFER

INDIRECT TRANSFER THROUGH INVESTMENT BANKERS

INDIRECT TRANSFER THROUGH FINANCIAL INTERMEDIARIES