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Friday, May 15, 2020

What is Finance? Colbalt Advisors

I searched Wikipedia and this is the the answer I found so credit to them. 

Finance is the management of money, particularly in relation to companies, organisations, or governments. Specifically, it deals with the questions of how an individual, company or government acquires the money needed - called capital in the company context - and how they then spend or invest that money.  Finance is then often split per the following major categories: corporate finance, personal finance and public finance.

You can find  Cobalt Advisors There is still so much to learn and great ways to find out about the topic just by using sites like Google.

At the same time, finance is about the overall "system"  the financial markets that allow the flow of money, via investments and other financial instruments, between and within these areas; this "flow" is facilitated by the financial services sector.

A major focus within finance is thus investment management — called money management for individuals, and asset management for institutions — and finance then includes the associated activities of securities trading & stock broking, investment banking, financial engineering, and risk management.

More abstractly, finance is concerned with the investment and deployment of assets and liabilities over "space and time": i.e. it is about performing valuation and asset allocation today, based on risk and uncertainty of future outcomes, incorporating the time value of money (determining the present value of these future values, "discounting", requires a risk-appropriate discount rate). Core finance theories can largely be divided between the following categories: financial economics, mathematical finance and valuation theory.

As an academic field, finance theory is studied and developed within the disciplines of management, (financial) economics, accountancy and applied mathematics. Correspondingly, given its wide application, there are several related professional qualifications that can lead to the field.

As the debate to whether finance is an art or a science is still open there have been recent efforts to organize a list of unsolved problems in finance.

But its still a small fraction of the other branches like  An entity whose income exceeds its expenditure can lend or invest the excess income to help that excess income produce more income in the future. Though on the other hand, an entity whose income is less than its expenditure can raise capital by borrowing or selling equity claims, decreasing its expenses, or increasing its income. The lender can find a borrower—a financial intermediary such as a bank—or buy notes or bonds (corporate bonds, government bonds, or mutual bonds) in the bond market. The lender receives interest, the borrower pays a higher interest than the lender receives, and the financial intermediary earns the difference for arranging the loan.

A bank aggregates the activities of many borrowers and lenders. A bank accepts deposits from lenders, on which it pays interest. The bank then lends these deposits to borrowers. Banks allow borrowers and lenders, of different sizes, to coordinate their activity.

Finance is used by individuals (personal finance), by governments (public finance), by businesses (corporate finance), and by other organizations such as schools and non-profit organizations. In general, the goals of each of the above activities are achieved through the use of appropriate financial instruments and methodologies, with consideration to their institutional setting.

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