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chapter 1 introduction of financial management
chapter 1 introduction of financial management
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I am currently majoring in Finance Management. Most of the time people think of finance as just managing money. However, finance is needed for so much more! The finance industry deals with starting businesses, developing new products, expanding markets, as well as everyday things like saving for retirement, purchasing a home, and even insurance. The stock market, asset allocation, portfolio analysis, and electronic commerce are all key aspects in finance. In this paper, I will explain how these features play a vital role in the industry, along with the issues that come with these factors. With technology advancing every day, the way people shop and invest their money has drastically changed. This is impacting financial professionals as …show more content…
However, I am still not 100% certain what I want to do for a career. In finance, there are so many options to consider. For example, I’ve looked into being a financial manager, an investment banker, or even a corporate lawyer. If I were to choose financial management as my career, the latest Internet trends impact that industry tremendously. When managing funds for a company, I would have access to all the information I need at my fingertips. However, I would need to pay careful attention to how e-commerce affects the company’s and the competition’s customers. Also, with all the information so accessible, people are finding ways to manage their money without the help of professionals. This could lead to a drop in demand for financial planners and managers. I, personally, don’t feel like this will be a huge issue since people will always need advice on saving for retirement or allocating their wealth. However, it is something to be aware of and might affect my career decision later on down the road. On the other end of the …show more content…
Whether it is dealing with the stock market, electronic commerce, portfolio diversification, or just simply allocating your assets, finance is more than just managing money. As technology progresses, the financial industry will advance and the demand for financial planners and managers could go down. However, there is no specific formula for allocating your wealth or for investing in the stock market. Every person and company is different, and the stock market changes constantly. People will always be running a business or a school, saving for retirement, financing a home, and investing their money. That is one of the reasons why I find finance so fascinating. Even if you aren’t making a career out of it, economic and monetary skills are vital for the rest of your life. Needless to say, finance is and always will be a diverse and ever-changing
Block, S. B., & Hirt, G. A. (2005). Foundations of Financial Management (11th ed). The
Mutual funds were long considered one of the best available easy-to-invest instruments that minimized risk and maximized returns. In the 80’s and 90’s, the US financial markets made trillions of dollars with the mutual fund structure. The funds, especially the most actively managed ones, were expected to outperform the market index in the long run. However, with expense ratios ranging as high as 1.5% to 2.5%, the funds underperformed the index by the amount of their expense ratio.
In Finance is Personal, Kim Stephenson and Ann B. Hutchins, explain concepts that support decision making around money. The authors base their concepts on personal values, attitudes, beliefs, and goals. Stephenson and Hutchins also teach the reader how to cope with thinking, feelings, and behaviors. In doing this, the author`s help the reader learn how they can handle their money to get what they want—not what someone else thinks they must have to be happy.
Finance is the most important asset in anyone 's life. The lack of adequate financial planning may results in insecure life. Wealth Building and assets management ensures a secure life without any financial crunches and problems. Personal asset management ensures the growth of wealth in the right direction by implementing an investment strategy that aims at balancing the risk in terms of rewards in accordance with the investor’s financial goals, risk tolerance and investment time frame. There are basically three assets classes i.e. equity, fixed income and cash or cash equivalents that behave differently over time in respect of risk and return.
Gerald, J. M., Samuel, J. Y., W, B. H., & Rabin, J. (2005). How financial managers deal
Financial Future: Where Will it be in 10 Years? Retrieved on November 20, 2013 from
Classic finance theory assumes that people are rational, however a person does not have to look very far into that assumption to realize that is not always the case. A study conducted by Brad M. Barber and Terrance Odean highlights this anomaly. They found that from 1991 to 1996 the market returned an annual 17.9% verses the average household net return of 16.4%. The households that traded the most earned an annual return of only 11.4%. This strikingly debunks the theory that investors are rational. Investors act with emotion and overconfidence, not rationality as has been assumed in past theory (Barber and Odean). Across the country, financial planners and wealth managers are asking what behavioral finance looks like, what can they do with it. Most advisors have experienced the frustration of developing a sound plan for their clients, only to have their client make excuses or end up ignoring the plan. This paper will highlight the history of behavioral finance, describe biases commonly employed by financial planning clients, and give suggestions as to ways financial advisors and wealth managers can work with clients with these biases and use positive versions of the biases to help with client education and understanding.
The Finance Career Cluster consists of four Pathways: Banking and Related Services, Insurance Services, Business Financial Management, and Financial Investment Planning. The career that has been assigned to me is Insurance Underwriter, which falls under the Insurance Services Pathway. There are about 42 different careers in this cluster, although, one thing that they have in common is that they all have to do with keeping track of money and expenses for corporations and government services. These people have to be good at calculating expenses and costs for small local companies whereas, some for big international corporations.
[9] Stephen A. Ross, Randolph W. Westerfield, Jeffrey F.Jaffe and Bradford D. Jordan. Modern Financial Management, pp. 307-309;341.
When people have low levels of financial literacy, they often make unproductive financial decisions. Consumers spend their money in suboptimal ways, borrow more than savings, and hence miss opportunities for investing. Through communicating the knowledge, taking advice about financial problems, developing skills, and attitudes associated with money management, financial education can offer communities to be successful in commercial world by using means to use their scarce financial resources more effectively and efficiently. It will enable people to choose the financial services and products that best meet their needs. One needs to plan of the future consequences namely illness, education for upcoming generation, marriage and other problems that may come up. Likewise, if one starts to save money from now there will not be any financial difficulty in future. This all will contribute people to be wise when handling finance resulting to lift the poverty line for the
There are many different investments that an individual can choose to invest funds in. Securities are stocks, bonds, options, futures, and swaps. Stocks represent ownership and can range from very risky stocks (penny stocks) to relatively safe dividend stocks. Choosing the right stock to invest in can seem like a complicated process, but to simplify it, there is one golden rule that an investor can implement to get started: “select the investment vehicles that offer the highest return for the level of risk that you’re comfortable with.”
The following executive summary is a hybrid of the investments article, “How to start out investing right” and the four of the six major lessons in the best selling personal finance book, “Rich Dad, Poor Dad.” Two different resources that highlight the importance of education and personal financial independence through life investments. We can agree that today’s society possess numerous amounts of resources to become self-employed and financially independent. However, not everybody takes advantage of such resources and fail to become financially independent due to fear of the unknown and lack of knowledge. Therefore, the following document will highlight the overarching path to becoming financially knowledgeable by learning how
While it is very important for young individuals to start to save and invest for their retirement, there are aspects that they should consider before jumping into investing into securities. Those subjects are cash, enough insurance, should you buy a home, how secure is your job, how much risk can you handle, equities are risky, get started, do everything, be flexible, and can you save and invest too much. These ten aspects should be looked at, analyzed, and taken into very critical thought before saving and investing into securities.
My family has an interesting history, with the fact being that we did not just appear, my great parents were likely slaves; I know that my great-great grandparents were. Since slavery did not end very long ago it is a pain that still lingers though I had never experienced the fullness of slavery myself. The historical monstrosity that took place then translates itself into the subtle monstrosity between blacks and whites today. I am aware of my place in America as not only a woman, but as a black woman. I am aware of the racial profiling I will receive based on the color of my skin, and I am aware that I have had family members to thrive despite the barriers of race and ethnicity. Therefore, I have taken the initiative - even before this paper - to understand my family background and why the color of my skin is an immense determination of my trajectory in life. Regardless, I have had the chance to learn as much as I can from a people whose identity were stolen from them long ago.
The clock reads 5:15 p.m. as I walk out the Ruston residence hall doors. I head towards the David L. Rice library, which is about a ten-minute walk from my dorm. As the sliding doors open, the strong aroma of coffee fills the air. I walk past the line at Starbucks and descend down the first flight of stairs. I turn left down the second hallway and enter room 0021. The pale, cream walls and clean whiteboard make the room appear brighter than it really is. Lovely, smiling faces welcome me as I sit down at the desk closest to the door. The clock now reads 5:30 p.m. It’s time to rebuild my faith and connect on a personal level with my fellow small group members.