Lecture Notes on Financial Planning

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CONTENT
Introduction
Budget
o Business start-up budget
oCorporate budget
oEvent management budget
oGovernment budget
United States
United Kingdom
oPersonal or family budget
oBudget types
Financial Planning an Overview
oPlanning
oService Overview
osuperannuation
oTaxation Planning
oSuccession Planning
oEstate planning financial planning industry
oFundamental Principles of Wealth and Resources
Basic Financial Concept
Personal Finance
Public Finance
oThe Economic Basis of Government Activity
oEfficiency
oExternalities and Government Activity
oPublic Goods
oPublic Choice and the Political Process
oGovernment Expenditures
oIncome Distribution
oFinancing
oTaxes
oDebts

Corporate finance
oCapital investment decisions
oThe investment decision
oEstimating the present value of future cash flows
oEstimating the value of options
oUsing real option valuation
oThe financing decision
oThe divided decision
oWorking Capital management
oRelationship with other areas in finance
oArbitrage
oDefault
Discounted cash flow
Financial capital
oFunding
Entrepreneur
oEntrepreneurship
Fixed income analysis
Gap financing
Hedging
oHedge
oHedger
Interest rate
oRisk free interest rate
oTerm structure of interest rates
ointerest
oeffective interest rate
onominal interest rate
ointerest rate basis
oFisher equation
Crowding Out
oannual percentage rate
Investment
oForeign direct investment
oOver-investing
Leverage
Locked-in value
Long
Liquidity
Margin account
Margin call
Mark to future
Mark to market
Market Impact
Medium of exchange
Money
coin
obanknote
ocounterfeit
Portfolio
oModern portfolio theory
Reference rate
oReset
Risk
oValue at Risk
oRisk management
Scenario analysis
Short selling
Speculation
Day trading
Behavioral Finance
Position trader
Spread
Standard of deferred payment
Store of value
Time horizon
Time value of money
oDiscounting
oPresent value
oFuture value
oNet present value
oInternal rate of return
oAnnuity
oPerpetuity
Unit of account
Volatility
Yield
Yield curve
Financial Statement
oPurpose of financial statements by business entities
oGovernment financial statements
oFinancial statements of non-profit organizations
o Personal financial statements
o Audit and legal implications
o Standards and regulations
o Inclusion in annual reports
o Moving to electronic financial statements
Conclusion
Definition of Terms
References

Introduction

You have probably heard the old adage, “If you don’t know where you are going, you are likely to end up anywhere”. This applies to finances just as much as it does other aspects of life. A destination is a “goal” and without one there is no way of measuring your performance. For sure, you want a life of abundance and prosperity and, for sure, you have your own financial goals in mind as well. If you want to achieve your financial goals this time, you can find ways to make it a good start. In these times of tight economy, being able to plan and achieve your financial goals is important and relevant. If you have been failing in the past, it must be a good time to check and assess your strategies in achieving your goals especially when it comes to money matters.

Therefore having a goal is essential to managing your money properly. After all, money is not an ‘end’ in itself. It is merely a ‘means’ to an end. This means we don’t save money for the sake of money but we save it for things such as ‘peace of mind’, college education, retirement, vacation home, etc. The more you understand this, the better equipped you will be for dealing with your own portfolio. So we now know that having a goal of achieving a particular rate of return is not enough. Instead a better goal would be a goal to achieve “X” rate of...
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