DEFINITION of 'Corporate Finance'

1) The financial activities related to running a corporation.

2) A division or department that oversees the financial activities of a company. Corporate
finance is primarily concerned with maximizing shareholder value through long-term and
short-term financial planning and the implementation of various strategies. Everything
from capital investment decisions to investment banking falls under the domain of
corporate finance.
Corporate finance
Among the financial activities that a corporate finance department is involved with
are capital investment decisions. Should a proposed investment be made? How
should the company pay for it; with equity or with debt, or combination of both?
Should shareholders be offered dividends on their investment in the company?
These are just some of the questions a corporate financial officer attempts to
answer on a consistent basis. Short-term issues include the management of current
assets and current liabilities, inventory control, investments and other short-term
financial issues. Long-term issues include new capital purchases and investments.
This course provides a brief introduction to the fundamentals of finance,
emphasizing their application to a wide variety of real-world situations spanning
personal finance, corporate decision-making, and financial intermediation. Key
concepts and applications include: time value of money, risk-return tradeoff, cost of
capital, interest rates, retirement savings, mortgage financing, auto leasing, capital
budgeting, asset valuation, discounted cash flow (DCF) analysis, net present value,
internal rate of return, hurdle rate, payback period.

DEFINITION of 'Risk Management'

The process of identification, analysis and either acceptance or mitigation of uncertainty in

investment decision-making. Essentially, risk management occurs anytime an investor or fund
manager analyzes and attempts to quantify the potential for losses in an investment and then
takes the appropriate action (or inaction) given their investment objectives and risk tolerance.
Inadequate risk management can result in severe consequences for companies as well as
individuals

Sa mga airline companies hindi naman maiiwasan magkaroon ng mga aksidente

kaya yung mga company dapat meron silang mga RISK MANAGEMENT. Yun yung
pag may aksidente o may nangyaring hindi inaasahan. Alam nila kung ano ang mga
tamang dapat gawin para hnd ito makaapekto sa mga pasahero o sa kompanya.
Para makagawa ng magandang risk management
1.kailangan alam mo yung mga problema na pwdeng mangyari ( IDENTIFICATION)
2.DAPAT alam mo kung ano yung dapat mong gawin tungkol dun sa problema.
(ANALYSIS)
3. dapat alam mo kung paano iiwasan o I pprevent yung mga problema.
(MITIGATION)

EXPLANATION YUNG NAKA BOX

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EXAMPLE NG MGA RISKS SA MGA AIRLINE COMPANIES

The risks to which the company is exposed are defined as follows:

Commodity price risk: The financial impact of movements in aviation fuel

prices;

Credit risk: Losses which may in future arise in situations where

counterparties default on deposit and derivative transactions that are
engaged in with domestic and international financial institutions and which
may be sustained in the management of relationships with banks;

Interest rate risk: Volatilities in aircraft financing caused by changes in

interest rates and in the market values of foreign currency debt and cash
items;

Cash flow risk: The possibility that movements in cash positions and
investment portfolios taking short-, medium-, and long-term cash flows into
account will thwart the realization of identified business objectives;

Exchange rate risk: The possibility that changes taking place in the exchange
rates applicable to foreign currency-denominated asset and liability accounts
may be incompatible;

Carbon emissions risk: Changes in the prices of carbon emissions certificates.

Risk mitigation strategies were developed to make use of derivative markets in line
with decisions taken so as to lock in commodity prices and credit interest rates in
order to protect the company against those risks.