TITLE : FINANCE.

When I was an undergraduate, I had no real conception of how I would spend my life. I was even uncertain as to my major field of study. And like many students I sampled a variety of subjects for any number of reasons. In retrospect, such sampling provided me not only breadth (if not depth) of knowledge but also with a better definition of my likes and dislikes.

Many students have followed a similar pattern of taking a variety of courses, and no doubt many more will continue to do so in the future. Introductory courses and textbooks thus can play an extremely important role in your development, for they expose you to a discipline about which you may have virtually no awareness. Time constraints, of course, mean such courses cannot cover material in depth, but they can whet your appetite for further study in the area.

Even within a general area of study such as business administration or education, you may receive only a brief exposure to particular fields. Most business students receive only a sampling of the various functional areas of business administration. An accounting major, for example, may take just one course in marketing or management, and a marketing major may take only one course in finance. It is for these students that this text is written. Since many aspects of business and business administration involve finance, it is desirable for specialists in the various disciplines of business to have some knowledge of financial institutions and financial decision making. While many students may have only this one exposure to the subject, it should give them a worEng knowledge of the terms, environment, and mechanics of finance and financial decision making.

Besides introducing the finance student to the world of finance, a major purpose of the text is to entice the non-finance major to do more work in this field. Faculty members naturally want students to pursue their own area of specialty. I want students to take advanced courses in the field, for such advanced work is more stimulating for the instructor. But the fact remains that introductory survey courses are the bread and butter of teaching. Such courses have the largest enrollments and are a main source of demand for the faculty's services. These courses do offer the instructor an excellent opportunity to encourage and entice students to continue studying in the field, and a clearly written and stimulating text can be of considerable help in en

The text is divided into the following two distinct parts: financial institutions and financial management. Many introductory courses in finance do not cover both areas, but I believe that financial management has much more meaning if the student has background in the area of financial institutions and markets. Of course, if students delay taking a finance course until late in their college career, they may have encountered financial institutions in other courses, and hence parts of the first section of the book may be redundant. But many students survey the field of finance earlier in their college careers and will have had little or no background in financial institutions. It is for these students that this text was primarily written. While these students may have had some exposure to business courses (e.g., an accounting course or an economics course), their background is still limited. Introducing them to both financial institutions and financial analysis is a logical extension of their academic development. This approach builds on their foundation and permits them to grow more rapidly in subsequent finance courses.

The text is constructed with the beginning student in mind. First, the chapters are compact and direct. No attempt is made to pad the text with theoretical subtleties and exceptions. Students will have plenty of opportunity to build on this base if they choose to do so in the future. Second, all the examples in the text are relatively simple, for complex examples are not needed to clarify the points being discussed. The numerical examples employ simple arithmetic, and small numbers are used in these examples. Of course, in the real world a firm will not have sales of $100 or expenses of $80, but this text is seeking not to illustrate the complexity of the real world but to clarify a point in finance. Third, there is a minimum of footnotes and virtually no reference in the text to the academic and professional literature. Students interested in doing further study may consult the reading lists at the ends of the chapters.

Finance employs many tools and concepts taught in introductory courses in accounting and economics. Knowledge of certain aspects of economics and accounting is desirable if the student is to have a good grasp of basic finance. However, for the purpose of this text, it is assumed that the student's background in either accounting or economics is minimal. Even though the student may have had a course or courses in either or both subjects, this text will review material pertinent to finance. Thus this text may also be used by the student who wants an introduction to the world of finance but who lacks any formal coursework in economics or accounting.

Besides the text material, each chapter has additional aids for the student. Each chapter is preceded by a set of learning objectives. Marginal notes highlight the subject being discussed, and the chapter ends with a list of key words and a set of questions and/or problems. Perhaps the most important of these aids are the learning objectives. Before students read the chapter they should ask what they expect to learn. But that is somewhat contradictory, since, if the student knows what is to be learned, the student probably already knows the material. The learning objectives help to overcome this contradiction by identifying potentially important aspects of the chapter. While these objectives do not cover all facets of the chapter, they do offer a guide to its content.

Since this text serves a general market, there is nothing in it that is original scholarship. The only originality will be in the nature of the presentation (i.e., the order of the material and the choice of examples and words used to convey the material). A book like this evolves and develops over time. I owe a considerable debt to the many students who suffered through classes and tests in which I experimented with examples, questions, and techniques which are incorporated in this text. Their criticisms (often implicit in the looks on their faces) helped me mold my writing style, examples, and questions to better communicate the concepts and tools of financial analysis.