Finance

Finance is a term for matters regarding the management, creation, and study of money and investments. Specifically, it deals with the questions of 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.

Finance is broadly divided into three categories: public finance, corporate finance and personal finance. A more recent development, behavioral finance, seeks to identify the cognitive (e.g., emotional, social, and psychological) reasons behind financial decisions.

Public finance

Public finance includes tax, spending, budgeting and debt issuance policies that affect how a government pays for the services it provides to the public.

Corporate finance

Corporate finance involves the financial aspect of businesses and the actions that managers take to increase the value of the firm to the shareholders, as well as the tools and analysis used to allocate financial resources.

Personal finance

Personal finance may involve paying for education, financing durable goods such as real estate and cars, buying insurance, e.g. health and property insurance, investing and saving for retirement.

Behavioral finance

Behavioral finance studies how the psychology of investors or managers affects financial decisions and markets, and is relevant when making a decision that can impact either negatively or positively on one of their areas.

See also

• Investment
• Economics
• Accounting
• Financial market
• Financial services
• Financial instruments

References

Finance Resources
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