Finances is a broad term encompassing a variety of issues regarding the study, generation, allocation, distribution, and use of monies. For instance, in economic terms finance refers to the science that studies the effects of monetary policy, interest rates, and fiscal stimulus programs on the level of economy activity. In financial theory, finances refers to the methods by which monetary wealth is produced, allocated, and saved. It also includes the methods by which losses are managed, surplus funds are invested, and the possibility of future surpluses. Finally, it includes methods used to cope with changes in circumstances (such as changing interest rates or real estate markets).
The study of finances revolves around many interrelated topics. One of these is public finance. Public finance is concerned with the management of the social and economic capital that arises through the process of economic activity. Public finance also includes tax systems, as well as governmental organizations such as universities and colleges. Public finance includes taxation, as well as the regulation of financial institutions such as banks and other lending institutions.
Another important area of finance is the business finance field. Business finance refers to all the approaches businesses take to raising capital, financing, acquiring land, buildings, and machinery to conduct their business. Business finance includes debt and equity financing, partnerships, commercial leases, and ownership rights such as preferred stocks and preferred debt stock. Business finance also includes indirect means of financing, such as trade credit, government loans, and federal funds. In addition, business finance encompasses the financing of environmental pollution, health, education, and consumer protection programs.
The study of banking involves many different topics. Among them are interest rates, banking regulations, banking products and services, banking management, credit and debit card processing, banking holidays and vacations, insurance, investment banking, internal controls, banking management reports, public sector banking, private banking, and insurance bankopathy. As stated above, there are many subtopics in the field of banking. Below is a list of the broad terms used to describe different aspects of the subject matter of banking.
Here is a broad term that describes the process of making loans from one source and repaying them with another source. Lending in this sense includes debt, secured and unsecured loans, mortgages, and derivatives such as credit default swaps, interest rate swap agreements, interest rate floors, and currency swap agreements. A borrower uses a capital market to borrow money from a lending firm and repay it with a certain amount of the borrower’s asset. The market is used to facilitate inter-bank transactions and provide an environment for secure borrowing by financial institutions. The size of the asset, its interest rate, collateral, amount borrowed, and the length of time to repay the capital are all important factors in determining how the borrower will repay the capital.
Financial planning is the process of creating a plan for managing one’s finances. The broad term is related to financial management and planning, the difference being that management refers to taking active steps to change the state of one’s finances, while financial planning is more specifically about planning. Many organizations use financial planning as part of their overall business strategy. The goal of any financial planner is to create a portfolio of investment strategies that will strengthen the foundation of the organization and help it achieve long term goals related to expansion, increased productivity and market share.