finance第1章

21
Finance
School of Management
Financial Decisions of Households
Consumption
and saving decisions Investment decisions Financing decisions Risk-management decisions

16
Finance
School of Management
Harry M. Markowitz (1927~)
Awarded to the 1990 Nobel Prize Main Contribution:

– The father of modern portfolio theory
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Finance Theory
consists
of
– a set of concepts that help to organize one’s thinking about how to allocate resources over time, – a set of quantitative models to help one evaluate alternatives, make decisions, and implement them.
What
do you know about „Finance‟?
?
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Finance
School of Management
Defining Finance
Finance, as a scientific discipline, is the study of how to allocate scarce resources over time un der conditions of uncertainty.
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Finance
School of Management
Quick Check

Is a corporation owned by a single person a sole proprietorship? Why?
In a corporation the liability of the single shareholder would be limited to the assets of the corporation.
Future
Present
9
Future
ຫໍສະໝຸດ Baidu
Finance
School of Management
Analytical “Pillars” to Finance
Optimization
over time Asset valuation Risk management
10
Finance
School of Management
24
Finance
School of Management
Financial Decisions of Firms

Financing (Capital structure) decision
– – – – A feasible financing plan The decisions about how much debt and equity to have Wide range of financial instruments and claims A corporation‟s capital structure determines who gets what shares of its cash flows, and partially determines who gets to control the company.
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Finance
School of Management
Merton H. Miller (1923~2000)
Awarded to the 1990 Nobel Prize Main Contribution:

– The M&M (Modigliani-Miller) Theorem
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12
Finance
School of Management
Why Study Finance?
13
Finance
School of Management
Why Study Finance?
14
Finance
School of Management
Why Study Finance?
15
Finance

A corporation（现代公司制）
– a legal entity distinct from its owners – ownership, board of directors and limited liability – public corporations & private corporations
5
Robert C. Merton
Finance
School of Management
Chapter 1: What is Finance?
Objective
• To Define Finance • The Value of Finance • Introduction to the Players
– 20% assignment & class performance – 15% mid-term test – 65% final test
About
the book and authors
2
课程概况
课程性质：
学科基础课
四川省精品课程 金融学基础
UESTC
学时与学分：
64学时，4学分 上课时间： 周二、周四上午3-4节 作业要求：
Finance
School of Management
FINANCE
Zvi Bodie Robert C. Merton
1
Finance
School of Management
About
the instructors About the TA About the course About the requirements
26
Finance
School of Management
Forms of Business Organization

A sole proprietorship（个体业主制）
– unlimited liability
A partnership （合伙制）
– unlimited liability – general partner & limited partner

The Goal of management Market DisciplineTakeovers Role of the Financial Specialists in a Corporation
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Finance
School of Management
Defining Finance
Finance
School of Management
William F. Sharpe (1934~)
Awarded to the 1990 Nobel Prize Main Contribution:

– Developing the Capital Asset Pricing Model (CAPM) theory
个人作业（英文）与小组作业
3
考核方式
四川省精品课程 金融学基础
UESTC
期末考试（65%）
期中考试（15%）
平时成绩（20%）

课堂表现 习题完成及答疑情况 小组作业情况 课程讲座表现 出勤表现
一页纸开卷
一页纸开卷

4
教材与作者
四川省精品课程 金融学基础
UESTC
Zvi Bodie
School of Management
Why Study Finance?
To manage your personal resources To deal with the world of business To pursue interesting and rewarding career opportunities To make informed public choices as a citizen To expand your mind
Finance
School of Management
Robert C. Merton (1944~)
Awarded to the 1997 Nobel Prize Main Contribution:

– The pricing of options and other derivatives
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Finance
School of Management
Financial Decisions of Firms

Strategic planning & Capital budget decisions
– What businesses to be in – Identifying ideas for new investment projects – Evaluating the projects, and deciding which ones to undertake – Implementing them, a plan for acquiring assets and for training the personnel
11
Finance
School of Management
Financial System
The
financial system is defined as the set of markets and other institutions used for financial contracting and the exchange of assets and risks. The ultimate function of the system is to satisfy people’s consumption preferences.
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Finance
School of Management
Chapter 1 Contents
Defining Finance Why Study Finance Household Finance Financial Decisions-Firms Forms of Business Organization Separation of Ownership and Management

Working capital management decision
– The day-to-day prosaic financial affairs of the business.
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Finance
School of Management
Financial Decisions of Firms

Dividend decision
– How much cash to distribute to shareholders
Risk-management Decision
– How and on what terms should the firm seek to reduce the financial uncertainties it faces?
22
Finance
School of Management
Important Terms
Assets
Personal
investing & Asset allocation Liability, Debt Net Worth = Assets – Liabilities Consumption preferences, exogenous and endogenous elements
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Finance
School of Management
Myron S. Scholes (1941~)
Awarded to the 1997 Nobel Prize Main Contribution:

– The pricing of options and other derivatives