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What is Finance?
Some typical examples of problems a finance professional deals with in his or her career:
- A corporation needs new financing. Is it better to issue bonds or shares? What are
the costs and benefits of each alternative? What are the features that can be packaged with the new
bond or stock that will attract investors?
- A corporation is considering an expansion of its manufacturing facilities. How
do we estimate the value created by the expansion? How should it be financed?
- In small business environments working capital management is crucial. Budgeting
cash inflows and outflows, understanding the financial implications of credit policy and inventory
management.
- An investment banker is bringing a new issue of stock to the market. When is
the best time to do it? At what price should it be offered? How should it be placed?
- The research department of a mutual fund management firm considers the stock of
a corporation for possible inclusion in its portfolio. Are its growth prospects sustainable? What
is the price we should pay for it?
- An importer is considering how to hedge its future payment to foreign suppliers
from a change in the exchange rates. How should we hedge the foreign exchange risk?
These are only a few of the interesting and challenging situations professionals resolve each day in
the world of business finance.
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