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L1: The Goals & Activities of Financial Management Cheat Sheet (DRAFT) by

Financial Management - Lecture 1 - Chapter 1 - The Goals and Activities of Financial Management

This is a draft cheat sheet. It is a work in progress and is not finished yet.

Invest­ments vs. Corporate Finance

Invest­ments
• Involves valuing and choosing stocks­/bonds.
• Investors create a divers­ified portfolio with securities from multiple companies.
 
Corporate Finance
• Focuses on deciding which assets or projects the firm should invest in.

Time Value of Money (TVM)

Future Value (FV):
What money today will be worth in the future.
Present Value (PV):
What future money is worth today.
 

Financial Management and Careers

Financial Management
• Overlaps with corporate finance; involves evaluating how outside investors view a company.
 
Careers
• Corporate financial officer, banker, stockb­roker, portfolio manager, financial consul­tant, etc.

Activities of Financial Managers

1. Daily Activities
• Monitoring cash flow, managing credit, overseeing inventory.
 
2. Long-term Activities
• Negoti­ating loans, issuing stocks­/bonds, planning budgets, and dividends.
 

Risk-r­eturn trade-off