Notes for Introduction to Finance and Sitiuation
Market Capital= Share Price X share outstanding
What is Finance?
-Allocation of funds under the conditions of risks or uncertainty
Corporate Finance
-Managing cash flow of a firm, managing risks for each action
Investment
-capital budgeting
Financing
-Choose the source of financing and the capital structure
Distribution
-Where to use the money, reinvest or grow the asset
Corporate governance
Read why shareowner value?
Classified board (might have 3 sets of directors to be chosen each year)
ESG- Environment Social Governance
Backdating- changed the option date to earlier lowest point of the stock
Asymmetric information (information are not the same for both the side)
***Adverse selection (before the transaction occurs)- One party have more and better
information than the other.”lemons problem” the seller have more information than
the buyer
***Moral hazard(after the transaction occurs)-principal and the agent have
conflivyiong preferences and the agent’s behaviour cannot be perfectly observed
Managing director (for small companies)
Independent director=Non-executive director (do not participate in day to day
operations and is higher than executive director)
Market Capital= Share Price X share outstanding
What is Finance?
-Allocation of funds under the conditions of risks or uncertainty
Corporate Finance
-Managing cash flow of a firm, managing risks for each action
Investment
-capital budgeting
Financing
-Choose the source of financing and the capital structure
Distribution
-Where to use the money, reinvest or grow the asset
Corporate governance
Read why shareowner value?
Classified board (might have 3 sets of directors to be chosen each year)
ESG- Environment Social Governance
Backdating- changed the option date to earlier lowest point of the stock
Asymmetric information (information are not the same for both the side)
***Adverse selection (before the transaction occurs)- One party have more and better
information than the other.”lemons problem” the seller have more information than
the buyer
***Moral hazard(after the transaction occurs)-principal and the agent have
conflivyiong preferences and the agent’s behaviour cannot be perfectly observed
Managing director (for small companies)
Independent director=Non-executive director (do not participate in day to day
operations and is higher than executive director)
