Get 0% discount. Hurry now while offer last till 05.11.2020 12:00

MBF 805 CORPORATE FINANCE

Course Summary
Back

Table of Content

Share
  • INTRODUCTION TO CORPORATE FINANCE
  • OBJECTIVE FUNCTION IN CORPORATE FINANCE
  • FORMS OF BUSINESS
  • AGENCY PROBLEMS AND CONTROL OF CORPORATIONS
  • FINANCIAL MARKET AND THE CORPORATIONS
  • UNDERSTANDING FINANCIAL STATEMENT
  • FINANCIAL RATIOS
  • ANALYSIS OF FINANCIAL RATIOS
  • FINANCIAL PLANNING AND GROWTH
  • PREPARATION OF ESTIMATED INCOME STATEMENT AND BALANCE SHEET
  • INVESTMENT AND FINANCING DECISION
  • CAPITAL STRUCTURE DECISION
  • COST OF CAPITAL
  • RISK ASSOCIATED WITH COST OF CAPITAL
  • CAPITAL BUDGETING
  • DIVIDEBEND DECISION, CORPORATE STRATEGY AND FIRM
  • BONDS AND WARRANTS
  • DIVIDEND POLICY
  • CORPORATE GROWTH
  • MERGERS AND RE – ORGANISATION
  • INTERNATIONAL FINANCE
Sample content.
FINANCIAL MARKET AND THE CORPORATIONS

Cash Flows and Financial Markets 

Cash Flows To and From the Firm

The movement of money in a firm follows this process:

  1. The firm raises money from financial markets by selling shares (equity) and borrowing funds (debt).

  2. The firm invests this money in current assets and fixed assets.

  3. These investments generate cash through business operations.

  4. Part of the cash is used to pay corporate taxes.

  5. Some remaining cash is reinvested back into the business.

  6. The rest is returned to financial markets as payments to creditors (interest) and shareholders (dividends).

Financial Markets

Financial markets bring together buyers and sellers of debt and equity securities. They differ based on:

  • Types of securities traded

  • Trading methods

  • Participants involved

Functions of Financial Markets

Financial markets operate as:

  1. Primary Markets – Where securities are sold for the first time to raise funds.

  2. Secondary Markets – Where previously issued securities are bought and sold among investors.

  • Equity securities are issued only by corporations.

  • Debt securities are issued by both governments and corporations.

Primary Market

  • The corporation sells securities directly to raise money.

  • Two main methods:

    • Public offering: Securities sold to the general public.

    • Private placement: Securities sold privately to selected investors (e.g., insurance companies or mutual funds).

  • Public offerings must be registered with regulatory authorities and involve high legal and administrative costs.

Secondary Market

  • Investors trade securities among themselves.

  • Corporations do not receive money directly from these trades.

  • Secondary markets are important because they provide liquidity, encouraging investors to buy securities initially.

Dealer vs Auction Markets

  • Dealer Markets (Over-the-Counter – OTC):

    • No central physical location.

    • Dealers buy and sell securities electronically.

  • Auction Markets (Exchanges):

    • Have a physical trading location.

    • Main role is to match buyers with sellers, while dealers play a smaller role.

This is a sample content. To view complete content, If already purchased, visit your library and read or purchase the item for ₦400.00