In [[Principles of Corporate Finance]] an two types of [[Asset]]'s are described:
* [[Real assets]] that ''need to be paid for''
** Tangible such as machinery, factories and offices
** Non-tangible assets such as technical expertise, trademarks and patents.
* [[Financial assets]] or securities
** A company sells claims on their 'real assets' in order to acquire money.
The role of a [[Financial Manager]] is to answer two questions:
1) Which [[Real assets]] should the firm invest in?
2 How should the cash for the investment be raised?
In large business separation of ownership and management should be separated, purely because they have many owners and managing it together would be impossible. Separating the roles introduces the [[agency dilemma|Agency theory]]. [[Agency costs]] are incurred when
1) Managers do not attempt to maximize the firms value
2) Shareholders spend extra money to monitor and control managers
bag
finance_public
created
Sat, 04 Jun 2011 20:39:24 GMT
creator
dirkjan
modified
Sat, 04 Jun 2011 20:39:24 GMT
modifier
dirkjan
tags
M12
Principles of Corporate Finance
creator
dirkjan