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Corporate Finance

Things You Should Know About Corporate Finance

Things You Should Know About Corporate Finance

Corporate finance is a specialty in finance that is concerned with the financial decisions that must be made by businesses. Corporate finance also accounts for the tools and analysis that a business should employ before reaching those decisions.
The main goal of corporate finance is to allow the company to maximize its corporate value while minimizing the financial risks to which the firm is exposed. Although there are theoretical differences between corporate finance and managerial finance, the first being concerned only with a high or low power finance corporation, the principles of each could be applied to the other.
A power finance corporation can use corporate finance to make both long and short term decisions, each of which require different techniques. A lower power finance corporation is forced to be more concerned with short term corporate finance, such as the balance of current assets and current liabilities. A more high power finance corporation which has enjoyed some success is more readily able to be concerned with long term corporate finance since they are more likely to have a cushion for their actions.
Corporate finance is associated with investment banking. An investment bank is used to evaluate a company’s financial needs and to raise the capital that is both an appropriate type and is able to satisfactorily meet those needs.

Fundamentals of Corporate Finance

Fundamentals of Corporate Finance

Fundamentals of Corporate Finance, Standard Edition is one of the premiere corporate finance books on the market today. Fundamentals of Corporate Finance, Standard Edition is published by McGraw-Hill. The book is written by Stephen A. Ross of the Massachusetts Institute of Technology, Randolph W. Westerfield of the University of Southern California, and Bradford D. Jordan, of the University of Kentucky-Lexington.
The various volumes of these corporate finance books are guided by the principle that corporate finance should be able to be taught in terms of three powerful ideas that are well integrated throughout the many publications of the Fundamentals of Corporate Finance, Standard Edition:
1.  Emphasis on Intuition,
2.  Unified Valuation Approach,
3.  Managerial Focus.
The emphasis on intuition in Fundamentals of Corporate Finance, Standard Edition seeks to present the underlying ideas in general terms before going into examples that demonstrate in a concrete manner the course of action that might be taken by a financial manager.
The unified valuation approach differs from other corporate finance books since it demonstrates the “net present value” of each option as the underlying concept behind each decision in corporate finance. This means that each topic is analyzed for its valuation, and care is then taken to explain the valuation effects of each choice.
The managerial focus is the result of the authors’ emphasis on the decision-maker aspect of a financial manager’s job and stresses the need for managerial input and careful judgment.

The Regulation and Deregulation of Corporate Banking

The Regulation and Deregulation of Corporate Banking

Corporate banking is a division of retail banking that focuses on meeting the needs of business customers. Corporate banking has largely been considered distinct from investment banking following the passage of the Glass-Steagall Act in the mid-1930s during the Great Depression.
In addition to establishing the Federal Deposit Insurance Corporation in the United States of America, the Glass-Steagall Act also established the principle that investment banks were limited to only capital market activities. Commercial banks were allowed to handle only corporate banking, individual banking, and retail banking.
The restrictions imposed to regulate corporate banking and retail banking were largely repealed through the Gramm-Leach-Bliley Act, the Depository Institutions Deregulation and Monetary Control Act, and American Homeownership and Economic Opportunity Act, which stripped away many of the regulations on corporate banking off of the books.
After these regulations were relaxed, corporation bank recruitment increased to find new employees in anticipation of an increased demand for their clients. These corporation bank recruitment efforts proved well planned since the demand for corporate banking increased after the regulations were relaxed.
However, the deregulation of corporate banking and investment banking, and the subsequent blurring of the lines between the two are suspected to have contributed to economic problems in the early 21st Century, leading some to support the resumption of tighter regulation of corporate banking. Some of these new regulations include the Volcker Rule and the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law by President Barack Obama on July 21, 2010.

What Should You know About Corporate Bonds?

What Should You know About Corporate Bonds?

Corporate bonds are bonds issued by a corporation so that the corporation will be able to raise money when it needs to expand its business. The term is typically applied to longer-term debt instruments that have a maturity date of at least one year. A shorter term corporate bond is sometimes known by the term “commercial paper.”
The term “corporate bond” is sometimes inaccurately used to refer to any bond that is not issued by a government. However, when the bond is not issued by an actual corporation, the bond should not technically be known as a corporate bond. Bonds of local authorities or supra-national organizations are never considered to be known as corporate bonds.
Often, a corporate bond will be listed on major exchanges, in which case the corporate bond becomes known as a listed bond. The coupon, or interest payment, of corporate bonds are usually taxable. However, in some cases a corporate bond may have a zero value coupon with a high redemption value. Despite being available on exchanges, most corporate bond trading is decentralized, dealer-based, and performed in over-the-counter markets.
A corporate bond may feature an embedded call option, which allows the corporate bond to be redeemed before its maturity date, though others offer the opportunity to transform the corporate bonds into equity.

Facts About Corporate Bond Rates

Facts About Corporate Bond Rates

Corporate bond rates are only of interest to individuals who engage in the trade and sale of these corporate bonds. Corporate bond quotes which list the corporate bond rates are given when the corporate bond is initially issued.
Corporate bond rates are affected by the fact that corporate bonds, even one issued by a well-established pillar of the community, carry a higher risk of default than many of the other kinds of bonds. As a result the corporate bond quotes issued when soliciting purchasers of these bonds are forced to issue higher rates in order to justly compensate investors for taking these risks.
However, not all corporate bond quotes carry the same risk. Depending on the corporation that issued the bond, the current market conditions, the government against which the corporate issuer is being compared, and the rating assigned to the company, the corporate bond rates can vary widely. However, once the bond is issued, the corporate bond rates are only significant for individuals who attempt to buy these corporate bonds through an exchange or in direct, over the counter purchases. Since corporate bond quotes vary, individuals trading bonds may attempt to exchange corporate bonds in order to find one with a more favorable rate.
Corporate bond rates may be judged based on the value of the corporate bond’s coupons.

Principles of Corporate Finance

Principles of Corporate Finance

Two of the most common corporate finance textbooks are Principles of Corporate Finance and Essentials of Corporate Finance. Both corporate finance textbooks are published by McGraw Hill Higher Education. Recent editions of both corporate financial textbooks that have been published take into account the recent economic downturn.
Essentials of Corporate Finance is written by Stephen A. Ross of the Massachusetts Institute of Technology, Randolph W. Westerfield of the University of Southern California, and Bradford D. Jordon of the University of Kentucky, Lexington. Essentials of Corporate Finance attempts to break the essential elements of corporate finance into a form that can be understood by a broad audience. 
Essentials of Corporate Finance is a condensation of Fundamental of Corporate Finance, Standard Edition, by the same authors, and retains the same three themes: an emphasis on intuition, a unified valuation approach, and a managerial focus.
Principles of Corporate Finance is the leading international corporate finance textbook. This book describes the theory and practice of corporate finance. Principles of Corporate Finance is interspersed with the use of financial theory in order to solve practical problems and in a response to change by showing how and why managers act the ways they do.
Recent editions of Principles of Corporate Finance have been accompanied by a homework management system which can be valuable to students learning about corporate finance. Besides being valuable to students, Principles of Corporate Finance also is a valued reference material for many practicing financial managers. Principles of Corporate Finance is written by Richard A. Brealey of London Business School, Stewart C. Myers of Massachusetts Institute of Technology, and Franklin Allen of the University of Pennsylvania.
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