academic discipline studying businesses, financing, investments and protection of economic value
Finance is the process of channeling money from savers and investors to entities that need it. Savers and investors have money available which could earn interest or dividends if put to productive use. Individuals, companies and governments must obtain money from some external source, such as loans or credit, when they lack sufficient funds to operate. Finance deals with how and why an individual, company or government acquires the money needed – called capital in the company context – and how they spend or invest that money.In academia, finance refers to the study of the securities and derivatives markets, and the institutions that serve as intermediaries to those markets and enable the flow of money through the economy. It is also the study of how to determine the value of assets such as stocks, bonds, loans, and by extension entire companies. Accurately determining value is crucial to sound business decisions. In some cases, such as one company acquiring another or entering a new line of business, judgements about asset values can make or break the investor.The following are definitions of finance as crafted by the authors indicated:
F.W.Paish: "Finance may be defined as the position of money at the time it is wanted".
John J. Hampton: "The term finance can be defined as the management of the flows of money through an organisation, whether it will be a corporation, school, or bank or government agency".
Howard and Upton: "Finance may be defined as that administrative area or set of administrative functions in an organisation which relates with the arrangement of each debt and credit so that the organisation may have the means to carry out the objectives as satisfactorily as possible".Finance encompasses:
investment management, securities trading and stock brokerage;
financial engineering; and
risk management.It is often split into the following major categories: corporate finance, personal finance and public finance.
Given its wide scope, finance is studied in several academic disciplines, and there are several related professional qualifications that lead to the field.
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