BUS 1050 1nd Edition Lecture 22Outline of Last Lecture I. Marketing and FinanceOutline of Current Lecture II. Finance and investmentsCurrent LectureFinancial managementCash flows-> Revenue = cost-expenses- net profit.ROI =Left side of brain: Analytic= finance accountantsRight side of brain: corpus collusom- creative. Marketing strategy, operations.Invest in highly liquid assets: T-bills, marketable securities, commercial paper, and certificates of deposit.Short-term financing (maturity less than one year)-Trade Credit-Promissory Notes-Family and Friends-Commercial banks-Factoring Accounts Receiveable-Commercial Paper-Internal SourcesFinancial Management:Equity-stockDebt-loans, bondsCollateral. Example: trade credit. Short term signed note.A factor knows the chance of getting 100% in return. Safe bonds to deal with- treasury bonds, treasury billsBonds: collateral trust, convertible bond, coupon bond, debenture, mortgage bond, municipal bond, yankee bond, zero coupon bond.These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Collateral trust- bonds secured by the general credit of the issuer as well as specific properties for which they are issued.Convertible bond- can be exchanged for another security usually common stockCoupon bond- bonds have coupons attached. Bondholders submits coupons to an agent for the paymentof interest.Debenture- bonds secured only by the general credit of the firm plus any unpledged assets.Mortgage bond- bonds secured by real propertyMunicipal bond- issued by the state or local government; interest rates are exempt from federal taxes.Yankee bond- bonds issued by a foreign government and are payable in US dollars.Zero-coupon bond- bonds pay no interest prior to maturity the return comes form the difference between purchase price and face value.Junk bond- high risk, high return. Small companies without money to risk invest.Sample of different stock available in the marketClassified common stock: stock consists of two or more classes of common stock that have different oting rights or claims on dividends. Convertible preferred: can be exchanged for shares of common stock at a predetermined exchange rate.Cumulative preferred- stock pays a dividend every year. If the dividend is not paid, the amount owed accumulates and must be paid before common stockholders receive any dividends.CEO in charge of – VP or marketing, VP of finance, and VP of operationsCEO-> VPs-> Analysts->
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