Finance is a general term covering many different things about the science of loans, lending, development, and spending of money. In particular, it covers questions of why and how an individual, organization or state get the funds they need, more commonly known as capital in the business context. The word “finance” comes from the Latin word meaning “science”. The discipline of finance is one of the most broad-based of all the fields of study. Some of its main attractions are its broad perspective, its long history and its applicability to a wide range of situations.
Among its many other important topics are interest rates, asset prices, credit, banking, insurance, economic growth, international trade, real estate, financial institutions, personal finance, entrepreneurship, portfolio management and financial derivatives. A good understanding of these concepts is necessary if you plan on entering the world of finance. One of the most popular courses in all of college is the micro economics curriculum, which is centered around these and other central areas of economics. Other important topics include compound interest, inflation, money markets and credit risks. One cannot start to explore the world of finance without first having a basic understanding of what makes up the world economy.
There are several broad areas of focus within finance. One of them is industrial organization. In this topic students learn about how firms interact and form relationships to create and manage business cycles, such as cyclical business cycles, stagflation, deflation and inflation. Studying industrial organization revolves around the macroeconomic theories of business cycles, interest rates, banking, economics and the role of finance in such a system. One of the fundamental areas of modern finance is the field of micro and macro economics.
Another broad term area of finance is finance theory. This study of economic issues deals primarily with managing money. It considers long run economic planning, investment, technology, risk and portfolio management. It also studies how changes in the composition of wealth affect the distribution of wealth.
Public finance is part and parcel of the business cycle. Its goal is to secure the financial future of the nation through efficient public finance. The study of public finance is the important branch of macroeconomics. These include such areas as taxation, spending, debt and finance growth. Governmental spending, like social security and Medicare, is an important area of public finance research.
A related major area of study is personal finance. People who study this discipline understand how people manage their money and where they can go for help when they are in trouble financially. Two main branches of personal finance are asset protection and credit utilization. Asset protection involves using insurance or bank guarantees to protect your cash assets from loss. Credit utilization involves making purchases with your credit cards based on your current financial situation. Both of these branches include various macroeconomic theories.
Corporate finance is related to banks and corporations. It examines the methods by which a firm finances its growth and provides jobs for the people that work for it. Examples include general economics and business banking. General economics examines the effect of economic policies on a company’s production and services. Business banking deals more with the day-to-day functioning of large corporations.
Lastly, the third major area of study in the business world is debt finance. People who study debt and its management specialize in finding new ways to secure financing for businesses and individuals. Some of these include investment strategies, debt consolidation, and settlement strategies. All three branches of business finance are important and useful in today’s economy.