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Flashcards in Topic 1 Deck (18):
1

What are the 3 sub-specialties of Finance?

Corporate Finance
Investments
Institutions

2

Corporate Finance

a.k.a Managerial Finance, Financial Management, Business Finance

Goal = maximize shareholder/owner wealth

Capital budgeting analysis: deciding what assets to buy

w/in company, for company

3

Investments

Goal = strategically invest other people's money

Most common responsibility = asset manager (invests funds to earn positive returns - through mutual funds (stocks), real estate (real estate investment trusts), venture capital (private companies), etc.

Asset pricing = valuing assets

Longing / Shorting



4

Institutions

BANKING (consumer & commercial), investment banks, pension funds, insurance companies

5

Commercial Banking

Teller (not much training --> Credit Analyst (number crunching / people skills), Manager

6

Corporate Finance

Highest Ranking official = CFO (CEO's right-hand person in all money matters)

Types of decisions they make:
Cash management
Tax strategies
Financial policy implementation
Investing and financing decisions

7

Financial planning

Work w/ individuals

Helps w/ tax planning, trusts, estates, wills

Must be CFP (certified financial planner)

8

Insurance

Corporate: Risk Manangement

Personal: auto, life, health, etc. insurance

9

Investment Banking

2008 Meltdown caused these firms to change their emphasis:
-Lehmen Brothers
-Merrill Lynch
-Goldman Sachs
-Morgan Stanley

6 primary roles of I-bankers: (read up on these...maybe..)
1. Company / Industry Analysis
2. Mergers / Acquisitions
3. Raising capital via corporate offerings
4. Sales / trading
5. Private client services
6. Back office support



10

Asset (Money) Management

Investing OPM (other ppl's money) - typically as fund managers

Mutual funds, pension funds, insurance funds,

AM's can invest in stocks, bonds, real estate, any asset

CFA (chartered financial analyst) = typical requirement for most funds & investment banks

11

Real Estate

Investing & Managing real property

12

Hedge Fund Management

Freaking rich

Very quantitative

Goal = earn strong return for investors

Difference from mutual fund = no limits: can buy long or sell short & can sell financial derivatives

Only the best Hedge fund managers have survived b/c of the 2009 crisis

13

Private Equity

Includes angel financing, venture capitalists, & take-over firms

Investing in small companies to help them grow / go public

Buyout firms / Leverage buyouts

14

Role of marketing

Sell product / service through advertising, etc.

15

Role of operations

Supply chain / efficiency

No longer company vs company, but SC vs SC

16

Role of Accounting

Financial Historians

17

Role of OB/HR

Firm's people

Employees = greatest asset

18

Role of Strategic Management

Provide internal consulting (most firms outsource)