ACTSC 221- Midterm Exam Guide - Comprehensive Notes for the exam ( 15 pages long!)

• School: University of Waterloo
• Department: Actuarial Science
• Course: ACTSC221
• Professor: Elshan Alekberov

Document Summary

Financial management - art/s(cid:272)ie(cid:374)(cid:272)e of (cid:373)a(cid:374)agi(cid:374)g a (cid:272)o(cid:373)pa(cid:374)(cid:455)(cid:859)s (cid:373)o(cid:374)e(cid:455) to (cid:373)eet goals: a financial manager uses financial statements and other information prepared by accountants to make financial decisions. The(cid:455) fo(cid:272)us o(cid:374) (cid:272)ash flo(cid:449)s, a(cid:374)d pla(cid:374) a(cid:374)d (cid:373)o(cid:374)itor the (cid:272)o(cid:373)pa(cid:374)(cid:455)(cid:859)s (cid:272)ash flo(cid:449)s to e(cid:374)sure that cash is available when needed: key activities of a financial manager. Financial planning - preparing the financial plan (project revenues, expenditures and financing needs over a given period. Investment (spending money) - investing funds into projects and securities that provide high returns to their risks. Financing (raising money) - obtaining funding and seeking the best balance between debt and equity: main goal is to maximize value of company to owners. Financial manager has to consider long and short term results of actions. Short term gain is associated with forgoing long term benefit (could be detrimental to company: opportunity for profit - return, potential for loss - risk. Higher the risk, higher the return (risk-return tradeoff)