WHAT IS FINANCE ?
Finance is a broad term that describes activities related to banking, debt or debt, credit, capital markets, currency, and investment. Essentially, finance is about the process of managing funds and obtaining the required funds. Finance also includes supervision, creativity and learning. Currency, banking, loans, investments, assets and liabilities that make up the financial system. Many basic concepts of finance come from microeconomics and macroeconomic theories. One of the most basic theories is the time value of money, which basically shows that the value of the dollar today is higher than the dollar in the future.
TYPES OF FINANCE-
Since individuals, businesses, and government agencies need funds to operate, they are mainly divided into three sub-categories: personal finance, corporate finance, and public finance (government).
Personal financial -
planning Financial planning involves analyzing your current financial situation. Those who develop strategies for future needs within financial constraints. Personal finances depend on personal circumstances and activities. Therefore, the financial strategy is highly dependent on the individual's income, life needs, goals and desires. People need to save for retirement, such as those who need enough savings or investment in their working life to fund their long-term plans. This type of financial management solution is included in personal finance. Personal financial management includes the purchase of financial products, such as credit cards, insurance, mortgage loans, and various types of investments. Personal financial component because it allows users to use checking and savings accounts and online or mobile payment services such as PayPal and Venmo.
Corporate financing -
Corporate financing refers to financial activities related to company activities, and there is usually a unit or department to supervise these financial activities. Example of corporate financing: A large company may have to decide whether to raise additional funds by issuing bonds or stocks. Investment banks can advise companies on such issues and help them in the securities market. Start-up companies can get a certain percentage of funds from angel investors or venture capitalists. Raise funds by issuing shares on the stock exchange through an initial public offering (IPO). In other cases, the company may try to estimate its capital and decide which projects to fund and which projects to suspend for business development. All these types of solutions are related to corporate financing.
Public finance-
Public finance includes taxation, expenditure, fiscal policy and bond issuance guidelines that have an impact on public finances. How the state pays for the services it provides to the people.The federal government helps prevent market chaos by monitoring resource allocation, income distribution, and economic stability. Regular financing is mainly provided through taxation. Loans from banks, insurance companies, and other countries also help to fund government expenditures. When managing funds in daily operations, government agencies also have social and financial responsibilities. The government is expected to provide its citizens with sufficient social programs and maintain a stable economy so that people can save and their money is safe.
Financial services-
They are the process by which consumers and companies acquire financial assets. A simple example is the financial services provided by payment system providers when accepting and transferring funds between payers and payees. This includes checking, credit and debit card accounts, and money orders.
What is financial activity?
Financial activities are actions and transactions taken by companies, governments, and individuals to achieve their economic goals. This is an activity that involves depositing or withdrawing funds. For example, buying and selling products (or assets). ), issuing stocks, issuing loans and maintaining accounts. When a company sells stock and repays debt, both are financial activities. Similarly, individuals and governments participate in financial activities with specific monetary goals, such as lending and taxation.