Chapter 1

1.2 The Four Types of Firms Sole Proprietorships

Partnerships Limited Liability Companies Corporations

In your business career, you may face such questions such as:

Should your firm launch a new product? Which supplier should your firm choose? Should your firm produce a part or outsource production? Should your firm issue new stock or borrow money instead? How can you raise money for your start-up firm?

Financial Management

The financial manager plays a critical role inside any business enterprise. Potential decisions include: What products to launch How to pay to develop those products What profits to keep and how to return profits to investors The financial manager does all of this with the goal of maximizing the value of the firm.

1.1 Why Study Finance? Individuals are taking charge of their personal finances with decisions such as:

When to start saving and how much to save for retirement. Whether a car loan or lease is more advantageous. Whether a particular stock is a good investment. How to evaluate the terms for a home mortgage.