Corporate Finance - Concept Questions
CORPORATE FINANCE – CONCEPT QUESTIONS
Class Notes - Introduction to Corporate Finance
1. Finance point of view: Corporation: a money processing machine? * Product markets: everything what corporates make (lead with customers, suppliers, labor)
* Capital markets: generic term for the entities which supply cash to this money processing machine, and the processing machine uses the money to do things and then periodic sends money back to the capital market there are inflows from the capital markets to the corporations and the money comes back out from to the corporations to the capital market this set of transactions in which the company interacts directly with the capital markets in particular when it takes in money in the capital market are called primary transactions
Primary Transactions: company takes in money in the form of equity and in the form of debt (issue debt to the market place). Each of those has different value and characteristics. How is equity get back from corporations: dividends, stock buyback How they return money to the debtholders: pay interest and pay principal
2. Secondary Markets
Secondary Markets: Very financial instruments that have been created by this primary transactions are traded back and for between entities. And in those transactions the corporation itself is not a direct party.
So, why do we care? As investors we might care, but as corporate financial executives care because this market provides real time information, which influences their decision making virtually all the time.
What is the decision making that goes on? What are the things that corporate finance take into account? * Analyzing project investments for the corporation that quantify the value of projects * Goal: increasing shareholders money or increasing the value of the corporation * Monitoring the flow and managing the flow of money in (how the money structure is inside) and monitoring how the money comes out. Managing
Class Notes - Introduction to Corporate Finance
1. Finance point of view: Corporation: a money processing machine? * Product markets: everything what corporates make (lead with customers, suppliers, labor)
* Capital markets: generic term for the entities which supply cash to this money processing machine, and the processing machine uses the money to do things and then periodic sends money back to the capital market there are inflows from the capital markets to the corporations and the money comes back out from to the corporations to the capital market this set of transactions in which the company interacts directly with the capital markets in particular when it takes in money in the capital market are called primary transactions
Primary Transactions: company takes in money in the form of equity and in the form of debt (issue debt to the market place). Each of those has different value and characteristics. How is equity get back from corporations: dividends, stock buyback How they return money to the debtholders: pay interest and pay principal
2. Secondary Markets
Secondary Markets: Very financial instruments that have been created by this primary transactions are traded back and for between entities. And in those transactions the corporation itself is not a direct party.
So, why do we care? As investors we might care, but as corporate financial executives care because this market provides real time information, which influences their decision making virtually all the time.
What is the decision making that goes on? What are the things that corporate finance take into account? * Analyzing project investments for the corporation that quantify the value of projects * Goal: increasing shareholders money or increasing the value of the corporation * Monitoring the flow and managing the flow of money in (how the money structure is inside) and monitoring how the money comes out. Managing