金融学原理(英文)第一单元课后答案

CHAPTER 1 ANSWERS 11 At the beginning of the twentieth century, the study of finance was mostly descriptive. As the proliferation of electronics and information technology has grown in recent decades, the study of finance has shifted toward more analytical methods. At the beginning of the century, managerial finance focused on mergers and acquisitions, investments were held mostly by powerful individuals or groups, and the banking system consisted of thousands of independent banking organizations that were primarily small, hometown banks. There was a shift toward greater regulation and control of financial services organizations after the financial disasters that occurred during the Depression era of the late 1920s and early 1930s. At that time, managerial finance was concerned with bankruptcy issues, the investments arena became substantially more regulated with the birth of the Securities and Exchange Commission (SEC), and the banking system went through significant restructuring with the failure of more than 6,000 banks. Modern finance finds its roots in the second half of the century when increased competition reduced the profit opportunities available to firms, so more emphasis was placed on evaluating the value of investment projects; small, individual investors became more active in the stock markets as mutual funds became popular; and, the restrictions on banking operations in the United States were eased as international competition increased in the banking industry. 1-2 Simply stated, finance deals with how firms generate and use funds. To do a good job, people in marketing must understand how marketing decisions affect and are affected by funds availability, by inventory levels, by excess plant capacity, and so forth. Similarly, accountants must understand how accounting data are used in corporate planning and are viewed by investors. Some knowledge of the financial function is necessary to do a good job in other areas of the firm. At the same time, however, financial managers must have an understanding of marketing, accounting, and so forth, to make more informed decisions about replacement or expansion of plant and equipment and about how to best finance their firms. 1-3 As we will show in later chapters, the financial decisions corporations make concern how to raise funds (sources) when they are needed and how invest funds that are available. As an individual, we make the same decisions--when we buy and car or a house, we search for the appropriate funding sources (in most cases the cheapest), and when we have excess funds, we deci