Corporate Finance

Question 1

What is Finance?

Answer 1

the study of how and under what terms savings
(money) are allocated between lenders and borrowers

Finance is distinct from economics in that it addresses not only how resources are allocated buralso under what terms and through what channels resources are allocated

Financial contracts or securities occur whenever Funds are transferred from Issuer to buyer

Question 2

What is the Study of Finance?

Answer 2

Requires a basic understanding of :
Securities (ex. stocks, bonds
Corporate Law
Financial Institutions and Markets

Question 3

What is Real vs Financial Assets

Answer 3

Real assets are tangible items owned by persons and businesses
eg, residential structures and property, mayor appliances and automobiles (consumer durables), office towers, factories, mines, machinery 3 equipment

Financial assets are what one Individual has lent to another eg. Consumer credit, loans, mortgazes

Question 4

What is a Financial Instrument?

Answer 4

A legal agreement involving any monetary value

Question 5

What is Intermediary?

Answer 5

The link between 2 parties

Question 6

What are two types of pensions?

Answer 6

Defined Benefit
→ Guarantee a fixed amount

Defined Contribution
→ Like a sawing account, depends on how much you are investing

Question 7

What is Financing?

Answer 7

Issue Bands → borrowing → Debt
Financing Issue Shares → given up → Equity Financing