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Submitted By ks356
Words 712
Pages 3
Finance: the study of how individuals, institutions, governments, and businesses acquire, spend, and manage money and other financial assets
Financial Environment: encompasses the financial system, institutions or intermediaries, financial markets, business firms, individuals, and global interactions that contribute to an efficiently operating economy
Financial Institutions: organizations or intermediaries that help the financial system operate efficiently and transfer funds from savers and investors to individuals, businesses, and governments that seek to spend or invest the funds in physical assets
Financial Markets: physical locations or electronic forums that facilitate the flow of funds among investors, businesses, and governments

Two Themes:
Entrepreneurial Finance: study of how growth-driven, performance-focused, early-stage firms raise financial capital and manage operations and assets
Personal Finance: study of how individuals prepare for financial emergencies, protect against premature death and property losses, and accumulate wealth
Why Study Finance: to make informed economic decisions; to make informed personal and business investment decisions; to make informed career decisions based on a basic understanding of business finance

Six Principles of Finance:
Time Value of Money: understand the economic behavior of individuals and the economic decisions of the institutions and businesses that they run; principle pillar apparent in many of our day-to-day activities, and knowledge of it will help us better understand the implications of time-varying money decisions
Risk vs. Return: trade-off btw risk and expected return in investments, both assets and securities; risk is the uncertainty about the outcome or payoff of an investment in the future; trade-off principle help us understand how individuals make economic decisions
Diversification of…...

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