Académique Documents
Professionnel Documents
Culture Documents
Lecture Outline
I. What is finance?
II. Types of businesses
III. Corporate securities as contingent
claims
IV. The principal-agent problem
V. Self study reading
I. Introduction to Finance
What is Finance?
2.
3.
Buildings
Machinery
Equipment
Research and development (R&D)
Real Assets
Financial
Manager
Financial
Markets
The Partnership
Formed by 2 or more individuals
General Partnership
Limited Partnership
The Corporation
A distinct legal entity owned by one or more
individuals
Owned by shareholders who elect directors oversee
managers
More complicated (articles of incorporation, bylaws)
Liquidity and marketability of ownership more easily
transferable than with proprietorships or partnerships.
Limited liability of shareholders
Continuity of Existence
Double taxation: corporate tax and tax of the
owners/shareholders
Equity (stocks):
10
10
15
20
25
30
35
40
45
11
10
15
20
25
30
35
40
45
12
10
15
20
25
30
35
40
45
13
14
15
16
17
Customers
Suppliers
Employees
Society
Environment
Government
Stockholders
Bondholders
18
19