SchoolSimon Fraser University
Course CodeBUS 320
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Bus 312 Lesson 1
1. What is Finance?
•Finance is both an academic and professional discipline devoted to the
study and practice of making “investment”.
•Investment-anything that is owned or controlled and that has the
potential to increase future consumption at the expense of current
2. Two types of financial analysis.
•External to the firm (“Asset pricing”)
•Internal to the firm (“Corporate finance”)
3. The role of financial managers
•Financial managers make financing decision to raise cash from
•Then financial managers make capital budget decision to invest
money in operating assets.
•Cash generated by operations.
•Cash reinvested (retained earnings/internal financing)
•Cash returned to investors (interest payment/dividends)
4. Function of financial market
•Allow consumption across time
•Pooling of risk
5. Three main questions in Finance
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