| Business
Finance :-
In the case of a company, managerial finance or corporate
finance is the task of providing the funds for the
corporations' activities. It generally involves balancing
risk and profitability. Long term funds would be provided
by ownership equity and long-term credit, often in
the form of bonds. These decisions lead to the company's
capital structure. Short term funding or working capital
is mostly provided by banks extending a line of credit.
On the bond market, borrowers package their debt in
the form of bonds. The borrower receives the money
it borrows by selling the bond, which includes a promise
to repay the value of the bond with interest. The
purchaser of a bond can resell the bond, so the actual
recipient of interest payments can change over time.
Bonds allow lenders to recoup the value of their loan
by simply selling the bond.
Another business decision concerning finance is investment,
or fund management. An investment is an acquisition
of an asset in the hopes that it will maintain or
increase its value. In investment management - in
choosing a portfolio - one has to decide what, how
much and when to invest. In doing so, one needs to
• Identify relevant objectives and constraints:
institution or individual - goals - time horizon -
risk aversion - tax considerations
• Identify the appropriate strategy: active
vs passive - hedging strategy
• Measure the portfolio performance
Financial management is duplicate with the financial
function of the Accounting profession. However, Financial
Accounting is more concerned with the reporting of
historical financial information, while the financial
decision is directed toward the future of the firm.
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