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CORPORATE FINANCE EXERCISE

SESSION I: REVIEW ANSWER
CHAPTER 1. INTRODUCTION TO CF: 1. What are the nature and the objective corporate finance? * Corporate finance: any financial or monetary activity that deals with a company and its money. * Objective: maximize the profits, increase liquidity, enhance competition ability 2. Describe the financial relationships in a company.
Shareholders are considered partial owners of an organization, although business owners retain majority ownership. Employees work for companies and receive wages for their job performance, but do not own any part of the company unless they purchase stock or acquire it through benefits.
(Shareholder Rights
When investors buy shares of a company’s …show more content…

Employee Rights
Although different from shareholders' rights, employees also have rights within a company. Employees are protected from discriminatory acts by employers, such as decisions based on sex, age, gender, sexual orientation, race, religion and national origin. Most state laws grant employees the right to privacy. Employers are prohibited from sharing employees’ personal information and accessing employees’ personal possessions without approval. Employees can seek legal counsel if they feel their employer violated their rights under federal or state law. In some companies, employees may also own shares of their employer’s stock as part of their benefits package, making them shareholders as well. Employees who own shares possess both shareholder and employee rights.)

3. Describe the main decisions of financial management.
INVESTMENT DECISION a) Determine the total amount of assets needed by a firm hence closely tied to the allocation of funds b) Two type of investment decisions namely: * Capital Investment decisions: large sums, non routine, longer term, critical to the business like purchase of plant and machinery or factory * Working Capital Investment decisions: more routine in nature, short term but are also very critical decisions like how much and how long to invest in inventories or receivables
FINANCING DECISION a) After deciding on the amount and type of assets to buy, the financial manager needs to decide on

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