Financial Management
CORPORATE fINANCE
One thing we should note is that the term corporate finance
seems to imply that what we cover is only relevant to corporations, but the truth is that
almost all of the topics we consider are much broader than that. Maybe business finance
would be a little more descriptive, but even this is too narrow because at least half of the
subjects we discuss in the pages ahead are really basic financial ideas and principles
applicable across all the various areas of finance and beyond.
seems to imply that what we cover is only relevant to corporations, but the truth is that
almost all of the topics we consider are much broader than that. Maybe business finance
would be a little more descriptive, but even this is too narrow because at least half of the
subjects we discuss in the pages ahead are really basic financial ideas and principles
applicable across all the various areas of finance and beyond.
Investments
Broadly speaking, the investments area deals with financial assets such as
stocks and bonds. Some of the more important questions include:
1. What determines the price of a financial asset such as a share of stock?
2. What are the potential risks and rewards associated with investing in financial assets?
3. What is the best mixture of the different types of financial assets to hold?
Students who specialize in the investments area have various career opportunities. Being a
stockbroker is one of the most common. Stockbrokers often work for large companies such
as Merrill Lynch, advising customers on what types of investments to consider and helping
them make buy and sell decisions. Financial advisers play a similar role, but are not necessarily brokers.
Portfolio management is a second investments-related career path. Portfolio managers,
as the name suggests, manage money for investors. For example, individual investors
frequently buy into mutual funds. Such funds are simply a means of pooling money that is
then invested by a portfolio manager. Portfolio managers also invest and manage money for
pension funds, insurance companies, and many other types of institutions.
Security analysis is a third area. A security analyst researches individual investments,
such as stock in a particular company, and makes a determination as to whether the price is
right. To do so, an analyst delves deeply into company and industry reports, along with a
variety of other information sources. Frequently, brokers and portfolio managers rely on
security analysts for information and recommendations.
These investments-related areas, like many areas in finance, share an interesting feature.
If they are done well, they can be very rewarding financially (translation: You can
make a lot of money). The bad news, of course, is that they can be very demanding and
very competitive, so they are definitely not for everybody.
stocks and bonds. Some of the more important questions include:
1. What determines the price of a financial asset such as a share of stock?
2. What are the potential risks and rewards associated with investing in financial assets?
3. What is the best mixture of the different types of financial assets to hold?
Students who specialize in the investments area have various career opportunities. Being a
stockbroker is one of the most common. Stockbrokers often work for large companies such
as Merrill Lynch, advising customers on what types of investments to consider and helping
them make buy and sell decisions. Financial advisers play a similar role, but are not necessarily brokers.
Portfolio management is a second investments-related career path. Portfolio managers,
as the name suggests, manage money for investors. For example, individual investors
frequently buy into mutual funds. Such funds are simply a means of pooling money that is
then invested by a portfolio manager. Portfolio managers also invest and manage money for
pension funds, insurance companies, and many other types of institutions.
Security analysis is a third area. A security analyst researches individual investments,
such as stock in a particular company, and makes a determination as to whether the price is
right. To do so, an analyst delves deeply into company and industry reports, along with a
variety of other information sources. Frequently, brokers and portfolio managers rely on
security analysts for information and recommendations.
These investments-related areas, like many areas in finance, share an interesting feature.
If they are done well, they can be very rewarding financially (translation: You can
make a lot of money). The bad news, of course, is that they can be very demanding and
very competitive, so they are definitely not for everybody.
Financial Institutions
Banks and insurance companies would probably be the most
familiar to you. Institutions such as these employ people to perform a wide variety of
finance-related tasks.
familiar to you. Institutions such as these employ people to perform a wide variety of
finance-related tasks.
International Finance
International finance isn’t so much an area as it is a specialization within
one of the main areas we described above. In other words, careers in international
finance generally involve international aspects of either corporate finance, investments,
or financial institutions.
one of the main areas we described above. In other words, careers in international
finance generally involve international aspects of either corporate finance, investments,
or financial institutions.