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Sep 27, 2007

What is Corporate Finance?

Finance is the heart of all the disciplines and no business or person can be competitive without sound financial system.

Corporate Finance is the area of finance in which financial managers manage cash flow in a business environment. It includes things like where to get money from, where to put that money in, when to get money out of a business and so on and so forth.

There are some evergreen principles of finance which are so very basic but are as solid as a rock, and entire foundation of this discipline stands comfortably on these principles. We will discuss these one by one later. Briefly they are:

Time Value of Money
Higher Risk should come with higher returns
Never put all your eggs at one place
Markets are smarter than the smartest individual
Arbitrage chances are rare

Role of Corporate Finance
Financing
Capital Budgeting
Risk Management
Corporate Governance

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