Basic Finance(An Introduction To Financial Institutions, Investments And Management

Finance" is a broad discipline. From an individual's perspective, finance encompasses financial institutions and investments. Virtually every day I have some contact with a financial institution. I write and receive checks, review my bank balance online, and use my credit cards. Other members of my family do the same. Your contact with financial institutions is probably just as frequent.I make investment decisions that often meet a specific purpose, such as a stock purchase in my retirement account or my grandchildren's college fund accounts. I may sell a stock that I believe is overvalued or buy one that I think is undervalued.Many people periodically make investment decisions. They may not even be conscious of these decisions: Having funds withheld from your paycheck and invested in your employer's 401(k) retirement plan is an investment decision, even if you don't select the specific assets to include in the plan. And the same applies when you leave funds in a mutual fund or continue to hold a stock. Maintaining those positions are also investment decisions.Business owners and managers make financial decisions, so the third facet of finance is often referred to as business finance or corporate finance. The employees of governments and nonprofit institutions also make similar financial decisions.Since expected future cash inflows and outflows affect current financial decisions, many tools used for making business decisions also apply to nonbusiness financial decisions.Of course, financial institutions, investments, and business finance do not operate independently. Some courses in finance are called "Managerial Finance," while others have titles such as "Financial Management." You might infer from such names that Financial Management is the same as Managerial Finance, but such an inference is probably incorrect. The focus in managerial finance is business financial decision making. Financial management is generally broader and combines financial institu-tions, investments, and business finance, although the emphasis is usually on their application to business decision making.This text introduces you to the three areas of the finance discipline. It provides you with breadth (but not depth) of knowledge of finance and is a foundation on which you may build. I realize that many students will take only one course in a specific discipline.Finance majors generally do not take additional courses in marketing; marketing majors may take only this one course in finance. Since you may have only this exposure to the areas of finance, this text gives you a working knowledge of the terms, environment, and mechanics of financial decision making.Besides introducing you to the broad field of finance, Basic Finance also aims to encourage all students to do additional work in the field. I am, of course, biased, but survey courses and introductory texts do offer instructors excellent opportunities to encourage (do I dare say "lobby"?) students to do additional work in their areas. To do this additional work, you need basic background. By exposing you to all facets of finance, this textbook lays a foundation that will encourage and facilitate your taking additional courses in finance.