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Insurance Companies and the Role They Play in Corporate Finance
Insurance companies are a special type of financial institution that deals in the business of managing risk. A corporation periodically gives them money and, in return, they promise to pay for the losses [more…]
Securities Firms and the Role They Play in Corporate Finance
Securities firms provide transaction services related to financial investments, which are quite distinct from the services provided by traditional depository institutions. However, many commercial banks [more…]
The Role of Underwriters in Corporate Finance
A special type of insurance company, called underwriters,deals only with other insurance companies. They analyze applications for insurance, determine the degree of risk and associated costs with issuing [more…]
The Differences between Hedge Funds and Mutual Funds
In corporate finance, funds come in two types — hedge funds and mutual funds — and although they both have the same fundamental principles, each type has some unique traits, processes, regulations, and [more…]
Financing Institutions and Their Roles in Corporate Finance
Financing institutions are kind of like banks in that they lend money, but they’re a bit different, too. First of all, they tend to give different types of loans than banks do. Secondly, they get their [more…]
U.S. Regulatory Bodies That Oversee Corporate Financial Institutions
Numerous regulatory bodies oversee corporate finances and financial institutions, and each one warrants its own book (in fact, the role and regulations encompassing each regulatory body span volumes of [more…]
Corporate Finance and the Federal Reserve and U.S. Treasury
A lot of people misconceive the actual role of the Federal Reserve. The actions of the Federal Reserve, however, are all quite transparent. Its reports are all available for public view, its actions are [more…]
What Capital Is in Corporate Finance
Everything that makes up a corporation and everything a corporation owns, including the building, equipment, office supplies, brand value, research, land, trademarks, and everything else, are considered [more…]
How Corporations Raise Money by Acquiring Debt
When a corporation needs money, one of the primary options it has available is to borrow some. Regardless of what the money’s for, when a corporation wants a loan, it starts by putting together a proposal [more…]
How Corporations Raise Cash by Selling Equity
Raising money by selling shares of equity is a little more complicated both in theory and in practice than borrowing money using loans. What you’re actually doing when you sell equity is selling bits of [more…]
What Kind of Jobs Are Available in Corporate Finance?
Corporate finance jobs aren’t just about crunching numbers all day in a hidden corner of a corporation’s financial department. A variety of employment opportunities are available within the corporate finance [more…]
There’s No Such Thing as a Trade Imbalance
At no point in a typical retail exchange do either you or the store owner have a trade imbalance, because the value of goods and money being exchanged are equal. [more…]
Purchasing Power Isn’t the Same Thing as Exchange Rate
The purchasing power of a nation’s currency refers to that nation’s ability to purchase goods. Usually purchasing power is measured using a list of necessities such as certain groceries, utilities, and [more…]
Eurobonds Aren’t Necessarily from Europe
The term Eurobonds refers to bonds in one nation that are denominated in another nation’s currency. So a Japanese-currency bond owned in Canada and subject to Canadian interest rates would be a type of [more…]
Interest Rates and Exchange Rates Have a Muddled Relationship
Particularly if you manage a multinational company, anticipating fluctuations in exchange rates can be an extremely important part of your company’s financial management success. So what influences exchange [more…]
Spot Rate Isn’t the Only Type of Currency Transaction
A number of things influence exchange rates, but in the end, how are exchange rates decided when a floating currency is involved? The process actually works a lot like buying stock. The organizations that [more…]
Diversification Can’t Completely Eliminate Risk Exposure
Diversifying your investments means buying stock in several different companies. In an ideal world, if one of those companies did poorly, then the others would help mitigate your losses. But even this [more…]
Cross-Listing Allows Companies to Tap the World’s Resources
The process of having shares listed in more than one equity market is called cross-listing. As companies reach out in search of capital to fund start-ups and expansion, they often look beyond their own [more…]
Outsourcing Is a Taxing Issue
The decision to outsource (or transfer certain operations to an outside company) is a financial one that many companies have to deal with at some point. Basically, a company has to decide whether another [more…]
Politics Complicate the Financial Life of Your Company
Governments and politicians seem to have an uncanny way of knowing exactly how to make your life as complicated as possible. When you’re dealing with international finance, you have to be aware of not [more…]
Cultural Understanding Is Vital to Corporate Finance
Not all financial infrastructures work the same way. Culture plays a big role in how a nation’s government, companies, and even individual transactions operate, so if you’re dealing with a company involved [more…]
Making Financial Decisions Is Rarely Entirely Rational
Studies in corporate finance make the assumption that people are rational decision makers. In fact, most economic models, financial and otherwise, assume that people act unemotionally and with a certain [more…]
Making Sound Financial Decisions Involves Identifying Logical Fallacies
Logic can be really complicated. Common sense may get you through the day in one piece, but when you’re dealing with finances, what you really want is good sense. The problem is that human brains have [more…]
Getting Emotional about Financial Decisions Can Leave You Crying
Your financial decisions can be some of the most emotionally charged decisions you make in your life, which is why many people prefer to let professionals handle their money. They believe that professionals [more…]
Financial Stampeding Can Get You Trampled
Investors have a tendency to get caught up in a stampede of other investors, believing that they’re running like the bulls on Wall Street when, in reality, they were just lemmings jumping off a cliff. [more…]
