Finance is a vast field with many different sub-disciplines that deal with different aspects of it. The most common area of finance that most students enter is business finance. Business finance deals with the aspects of business that are financial. This includes items such as purchasing property, paying employees, borrowing money, and investing in businesses. Other areas of finance that are often dealt with in business our inventory, venture capital, and insurance.
Public finance is the area of governmental affairs, which can include taxes, spending, and regulation of the financial system. Public finance also deals with investments for the public good. Many think of this as being involved with investment mortgages and the like. Some areas of public finance deal primarily with making investments, while others have a hand in managing borrowing and lending. Some of these areas of public finance are government banking, municipal finance, and institutional finance.
Real estate is an important part of finance. Real estate deals are all about the flow of funds through an investment. Therefore, real estate valuation is an important part of any investment decision. Areas of real estate financing are mortgage banking, commercial real estate financing, and the real estate investor’s market.
International finances is concerned with those factors that affect the transfer of value from one country to another. International finance is almost as diverse as its domestic counterparts. This includes foreign direct investment, foreign exchange traded products, foreign direct savings, cross-border trading, and so on. The scope of international finance is vast, even when you consider just the areas of financial management as opposed to the entire world itself.
Debt is the purchase of goods and services with the provision of collateral. Common forms of collateral are government securities, personal property, financial institutions, and other items of wealth. When there is an influx of cash into the economy, the supply of funds is increased, forcing interest rates down. With the lower interest rates, more money is spent, generating more profits for those involved in the finance and credit markets.
Finance, when combined with accounting and other financial systems, produces a complete picture of the state of a country’s finances. Finance helps create laws that affect private citizens and companies. For example, a loan provided by a bank is considered to be a secured debt because it is based upon the promise of repayment from a borrower. A mortgage, on the other hand, is unsecured debt. Many private sectors have turned to finance in order to make borrowings feasible.
Public finance involves the use of borrowed funds for the purposes of improving the efficiency of the public sector. The major elements of public finance include taxes, tariffs, subsidies, grants, and licenses. The major components of economic theory that Finance students learn include demand, supply, competition, and balance of payments. Public finance incorporates the major theories of economics such as the theory of investment, the theory of risk, the theory of value, monetarily based budgeting, consumption analysis, and asset allocation.
Finance students who wish to specialize in particular areas of finance are required to undertake a rigorous course of study leading to an examination. Finance degrees at business or law universities usually take several years. Students who wish to begin careers as managers or investment consultants will have to complete more advanced studies and take the exam after a further two years. To start off, most graduates will take internships in order to gain the necessary work experience.
The field of behavioral finance is comparatively new compared to other disciplines. The aim of behavioral finance is to discover the mechanisms behind how people make decisions in the financial markets. A large part of this field is related to finance but the scope also extends to psychology, decision sciences and even marketing. The main areas of behavioral finance are pricing, actuarial science, decision theory, behavioral economics and social decision sciences.
Public finance includes taxation, regulation, pension funds, and municipal bonds. Regulation of finance aims at ensuring fair play in the marketplace and preventing unfair exchange of risks among entities. Control of municipal bonds is carried out by local governments through regulation and choice. Finance students learn about the different ways by which the state regulates finance. This includes governmental institutions such as banks, public utilities, corporations, insurance companies, and public financial institutions such as credit unions.
There is a distinct interdependence between economic growth and public debt. Growth in economy imply an increase in public expenditures and consequently rise in public debt. Hence, to ensure a sustainable growth in finances, it is essential to carefully monitor public debts and ensure that they do not exceed the capacity of the economy. Finance graduates can choose to specialize in either micro or macro economics to study the interrelations between economic growth, public finance, and public debt. Finance graduates can also go for specialization in the area of statistics to study population trends and its impact on economic development.