财务管理的概念：Concerns the acquisition, financing, and management of assets with some overall goal in mind. Investment decisions，Financing decisions，Asset management decisions。

The Goal of the Firm：Maximization of Shareholder Wealth：Value creation occurs when we maximize the share price for current shareholders.公司组织形式：Sole Proprietorships：Advantages：Simplicity，Low setup cost，Quick set up，Single tax filing on individual form。

Disadvantages：Unlimited liability，Hard to raise additional capital，Transfer of ownership difficulties，Partnerships (general and limited) Advantages：Can be simple，Low setup cost, higher than sole proprietorship，Relatively quick setup，Limited liability for limited partners。

Disadvantages：Unlimited liability for the general partner，Difficult to raise additional capital, but easier than sole proprietorship，Transfer of ownership difficultiesCorporations ：Advantages：Limited liability，Easy transfer of ownership，Unlimited life，Easier to raise large quantities of capital。

Disadvantages：Double taxation，More difficult to establish ，More expensive to set up and maintain。

5c系统：Five Cs of Credit1 Character – willingness to meet financial obligations2 Capacity – ability to meet financial obligations out of operating cash flows3 Capital –financial reserves（储备）4 Collateral – assets pledged as security5 Conditions –general economic conditions related to customer’s businessPBP的优缺点：Strengths:1 Easy to use and understand2Can be used as a measure of liquidity3Easier to forecast ST than LT flowsWeaknesses:1Does not account for TVM2Does not consider cash flows beyond the PBP3Cutoff period is subjectiveIrr的优缺点：Strengths:1Accounts for TVM2Considers all cash flows3 Less subjectivityWeaknesses:1 Assumes all cash flows reinvested at the IRR2Difficulties with project rankings and Multiple IRRsNpv的优缺点：Strengths:1Cash flows assumed to be reinvested at the hurdle rate.2Accounts for TVM.3Considers all cash flows.Weaknesses:May not include managerial options embedded in the projectPI的优缺点：Strengths:1Same as NPV2Allows comparison of different scale projectsWeaknesses:1Same as NPV2Provides only relative profitability3Potential Ranking Problems风险与报酬：Risk: The variability of returns from those that are expected.Systematic Risk is the variability of return on stocks or portfolios associated with changes in return on the market as a whole.Risk factors that affect a large number of assets,Also known as non-diversifiable risk or market risk,Includes such things as changes in GDP, inflation, interest rates, etc.Unsystematic Risk is the variability of return on stocks or portfolios not explained by general market movements. It is avoidable through diversification.Risk factors that affect a limited number of assets,Also known as unique risk and asset-specific risk,Includes such things as labor strikes, part shortages, etc.Return:Income received on an investment plus any change in market price, usually expressed as a percent of the beginning market price of the investment.1There is a reward for bearing risk 2The greater the potential reward, the greater the risk 3This is called the risk-return trade-off.Systematic Risk Principle:There is a reward for bearing risk;There is not a reward for bearing risk unnecessarily;The expected return on a risky asset depends only on that asset’s systematic risk since unsystematic risk can be diversified away.Motives for Holding Cash1Transactions Motive -- to meet payments arising in the ordinary course of business2 Speculative Motive-- to take advantage of temporary opportunities3 Precautionary Motive-- to maintain a cushion or buffer to meet unexpected cash needs Variables in Marketable Securities Selection1. Interest Rate (or Yield) Risk：The variability in the market price of a security caused by changes in interest rates.2 Maturity：Refers to the remaining life of the security.3 Safety：Refers to the likelihood of getting back the same number of dollars you originally invested (principal).4Marketability (or Liquidity)：The ability to sell a significant volume of securities in a short period of time in the secondary market without significant price concession.。