Corporate Finance Notes (MBA, BBA, B.Com, Management) for mba, bba, b.com and other management and business studies students. Corporate finance is the most important subjects in the financial area. It is deep rooted in our everyday lives. All of us work in large or small firms. These firms raise capital and then deploy this capital for productive purposes. The financial calculations that drive or goes behind raising and successfully deploying capital is the foundation of corporate finance. Corporate finance can be defining as, the zone that includes the financial parts of a business. Financial parts include accounting and investments.
Precautionary Motive “The desire to keep extra money in case an unforeseen situation requires a capital outlay. For example, one may wish to save extra money to pay for medical bills in case of an accident. According to John Maynard Keynes, people keep savings accounts, as well as some stocks and commodities, w... read more
October 13, 2019
Efficient market hypothesis was developed by fama in 1970 and according to fama the efficient market hypothesis has three forms. Three Forms of EMH Weak form of efficient market Strong form of efficient market Semi-strong form of efficient market 1. Weak Form of Efficient Market The curr... read more
October 07, 2019
Tests for the Semi Strong Market When the current security prices reflect all the public information including market and non-market information. This implies that decisions made on new information after it is made public with not result into any above the average profit. In semi strong form of efficient market, no r... read more
October 07, 2019
The first hypothesis is Random Walk Hypothesis. 1. Random Walk Hypothesis According to this hypothesis the security prices adjust themselves randomly this implies that predicting any changes in the security prices is out of question. The random walk hypothesis is a financial theory stating that stock market p... read more
September 25, 2019
What is Divestiture Selling off some part of the business or the whole business is known as Divestiture. The divestiture can be in two forms; Involuntary Divestiture Involuntary divestiture refers to the liquidation of the whole business as a result of anti-trust ruling by the government. Voluntary Di... read more
March 06, 2019
Term Loan Term loan is a type of loan whose repayment takes place in more than one year but less than 10 year. Term loan are extended under a formal agreement between the borrower and lender. The repayment of term loans normally takes place quarterly, semi- annually and annually. The repayment includes interest ... read more
December 07, 2018
Bonds Its contract between two parties in which borrower agrees to pay interest and principle at the decided time. Bonds are the long term security. If the company’s pay money then first of all they pay the bonds. Every bond comes with a booklet known as Indenture in which it’s all the terms and condition... read more
December 05, 2018
Option An option is a derivative contract that provides a party the right to buy or sell an underlying asset at a fix price by a certain time in future, the party holding the right is an option buyer while the party granting the right is the option seller or option writer. The option buyer pays the seller an amount c... read more
December 05, 2018
Agency problem can be considered as: Managers Vs Owners Creditors Vs Owners Senior management Vs Junior management Owners Vs Other parties Brief discussion of each category of agency problem is specified below: 1. Managers Vs Owners: In situation of joint stock company ownersh... read more
January 07, 2018
Financial mediators perform a significant role in the development process, mainly through their role in allocating resources to their maximum productive uses. More efficient financial markets aid economic agents trade, hedge, pool risk, raising investment and economic growth. Financial institutions provide consumers and ... read more
January 03, 2018