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Encyclopedia > Finance
Finance

US$100 bill Prose is writing distinguished from poetry by its greater variety of rhythm and its closer resemblance to everyday speech. ... This is a file from the Wikimedia Commons, a repository of free content hosted by the Wikimedia Foundation. ...


Financial Markets

Bond market
Stock (Equities) Market
Forex market
Derivatives market
Commodity market
Spot (cash) Market
OTC market
Real Estate market This article does not cite any references or sources. ... The bond market, also known as the debit, credit, or fixed income market, is a financial market where participants buy and sell debt securities usually in the form of bonds. ... A stock market is a market for the trading of company stock, and derivatives of same; both of these are securities listed on a stock exchange as well as those only traded privately. ... In finance, the exchange rate between two currencies specifies how much one currency is worth in terms of the other. ... The derivatives markets are the financial markets for derivatives. ... Chicago Board of Trade Futures market Commodity markets are markets where raw or primary products are exchanged. ... Template:The Spot Market The Spot Market or Cash Marketis a commodities or securities market in which goods are sold for cash and delivered immediately. ... Over-the-counter (OTC) trading is to trade financial instruments such as stocks, bonds, commodities or derivatives directly between two parties. ... Real estate is a legal term that encompasses land along with anything permanently affixed to the land, such as buildings. ...


Market Participants

Investors
Speculators
Institutional Investors There are two basic financial market participant catagories, Investor vs. ... Investment is a term with several closely related meanings in finance and economics. ... Speculation is the buying, holding, and selling of stocks, commodities, futures, currencies, collectibles, real estate, or any valuable thing to profit from fluctuations in its price as opposed to buying it for use or for income - dividends, rent etc. ... An institutional investor is an investor who is an institution like a bank, insurance fund, retirement fund, or mutual fund manager. ...


Corporate finance

Structured finance
Capital budgeting
Financial risk management
Mergers and Acquisitions
Accounting
Financial Statements
Auditing
Credit rating agency Domestic credit to private sector in 2005 Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. ... Structured finance describes any non-standard way of raising money. ... The process of determining which potential long-term projects are worth undertaking, by comparing their expected discounted cash flows with their internal rates of return. ... Financial risk management is the practice of creating economic value in a firm by using financial instruments to manage exposure to risk, particularly credit and market risk. ... Acquisition redirects here. ... It has been suggested that Accounting scholarship be merged into this article or section. ... Historical financial statement Financial statements (or financial reports) are formal records of a business financial activities. ... Basic definition Audit is the examination of records and reports of a company, in order to check that what is provided is relevant and accurate. ... A credit rating agency (CRA) is a company that assigns credit ratings for issuers of certain types of debt obligations. ...


Personal finance

Credit and Debt
Employment contract
Retirement
Financial planning Personal finance is the application of the principles of finance to the monetary decisions of an individual or family unit. ... Credit as a financial term, used in such terms as credit card, refers to the granting of a loan and the creation of debt. ... For other uses, see Debt (disambiguation). ... An employment contract is an agreement entered into between an employer and an employee at the commencement of the period of employment and stating the exact nature of their business relationship, specifically what compensation the employee will receive in exchange for specific work performed. ... Retirement is the point where a person stops employment completely. ... A Financial Planner or Personal Financial Planner is a practicing professional who helps people to deal with various personal financial issues through proper planning, which includes but not limited to these major areas: tertiary education planning, retirement planning, investment planning, risk management and insurance planning, tax planning, estate planning and...


Public finance

Tax This article does not cite any references or sources. ... Taxes redirects here. ...


Banks and Banking

Fractional-reserve banking
Central Bank
List of banks
Deposits
Loan
Money supply For other uses, see Bank (disambiguation). ... Fractional-reserve banking refers to a financial system in which some fraction of the deposits can be used to finance profitable but illiquid investments. ... This article does not cite any references or sources. ... This is a list of banks throughout the world. ... Bank deposits are the large part of the money supply. They come in different types depending on withdrawal restrictions. ... For other uses, see Loan (disambiguation). ... In macroeconomics, money supply (monetary aggregates, money stock) is the quantity of currency and money in bank accounts in the hands of the non-bank public available within the economy to purchase goods, services, and securities. ...


Financial regulation

Finance designations
Accounting scandals Financial supervision is government supervision of financial institutions by regulators. ... There are a variety of Finance designations or Accreditations that can be earned, and awarded to those in the finance industry. ... Accounting scandals, or corporate accounting scandals are political and business scandals which arise with the disclosure of misdeeds by trusted executives of large public corporations. ...


History of finance

Stock market bubble
Recession
Stock market crash A stock market bubble is a type of economic bubble taking place in stock markets when price of stocks rise and become overvalued by any measure of stock valuation. ... In macroeconomics, a recession is a decline in a countrys real gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year. ... A stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market. ...


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The field of finance refers to the concepts of time, money and risk and how they are interelated. The term "finance" may thus incorporate any of the following:

  • The study of money and other assets;
  • The management and control of those assets;
  • Profiling and managing project risks;
  • The science of managing money;
  • The industry that delivers financial services
  • As a verb, "to finance" is to provide funds for business or for an individual's large purchases (car, home, etc.).

Contents

For other uses, see Money (disambiguation). ... This article is about the business definition. ... In economics, a business (also called firm or enterprise) is a legally recognized organizational entity designed to provide goods and/or services to consumers or corporate entities such as governments, charities or other businesses. ...

The main techniques and sectors of the financial industry

Main article: financial services

An entity whose income exceeds its expenditure can lend or invest the excess income. 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 in the bond market. The lender receives interest, the borrower pays a higher interest than the lender receives, and the financial intermediary pockets the difference. Financial services is a term used to refer to the services provided by the finance industry. ... For other uses, see Bank (disambiguation). ... The bond market, also known as the debit, credit, or fixed income market, is a financial market where participants buy and sell debt securities usually in the form of bonds. ...


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


A specific example of corporate finance is the sale of stock by a company to institutional investors like investment banks, who in turn generally sell it to the public. The stock gives whoever owns it part ownership in that company. If you buy one share of XYZ Inc, and they have 100 shares outstanding (held by investors), you are 1/100 owner of that company. Of course, in return for the stock, the company receives cash, which it uses to expand its business in a process called "equity financing". Equity financing mixed with the sale of bonds (or any other debt financing) is called the company's capital structure. Gearing ratios redirects here. ...


Finance is used by individuals (personal finance), by governments (public finance), by businesses (corporate finance), as well as by a wide variety of organizations including schools and non-profit organizations. In general, the goals of each of the above activities are achieved through the use of appropriate financial instruments, with consideration to their institutional setting. Personal finance is the application of the principles of finance to the monetary decisions of an individual or family unit. ... This article does not cite any references or sources. ... Domestic credit to private sector in 2005 Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. ...


Finance is one of the most important aspects of business management. Without proper financial planning a new enterprise is unlikely to be successful. Managing money (a liquid asset) is essential to ensure a secure future, both for the individual and an organization. Management (from Old French ménagement the art of conducting, directing, from Latin manu agere to lead by the hand) characterises the process of leading and directing all or part of an organization, often a business, through the deployment and manipulation of resources (human, financial, material, intellectual or intangible). ...


Personal finance

Main article: Personal finance

Questions in personal finance revolve around Personal finance is the application of the principles of finance to the monetary decisions of an individual or family unit. ...

  • How much money will be needed by an individual (or by a family) at various points in the future?
  • Where will this money come from (e.g. savings or borrowing)?
  • How can people protect themselves against unforeseen events in their lives, and risk in financial markets?
  • How can family assets be best transferred across generations (bequests and inheritance)?
  • How do taxes (tax subsidies or penalties) affect personal financial decisions?

Personal financial decisions 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. A car (Toyota Corolla S) is a durable good in economics. ... Real estate is a legal term that encompasses land along with anything permanently affixed to the land, such as buildings. ... Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. ... Retirement is the point where a person stops employment completely. ...


Personal financial decisions may also involve paying for a loan.


Corporate finance

Main article: Corporate finance

Managerial or corporate finance is the task of providing the funds for a corporation's activities. For small business, this is referred to as SME finance. It generally involves balancing risk and profitability, while attempting to maximize an entity's wealth and the value of its stock. Domestic credit to private sector in 2005 Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. ... Managerial Finance is that branch of finance that provide tools for a companys financial managers. ... Domestic credit to private sector in 2005 Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. ... Mom and pop store redirects here. ... This article or section is in need of attention from an expert on the subject. ...


Long term funds are provided by ownership equity and long-term credit, often in the form of bonds. The balance between these forms the company's capital structure. Short-term funding or working capital is mostly provided by banks extending a line of credit. At the start of a business, owners put some funding into the business to finance assets. ... Credit as a financial term, used in such terms as credit card, refers to the granting of a loan and the creation of debt. ... For alternative meanings, see bond (a disambiguation page). ... Gearing ratios redirects here. ... Domestic credit to private sector in 2005 Working capital (also known as net working capital) is a financial metric which represents the amount of day-by-day operating liquidity available to a business. ...


Another business decision concerning finance is investment, or fund management. An investment is an acquisition of an asset in the hope that it will maintain or increase its value. In investment management -- in choosing a portfolio -- one has to decide what, how much and when to invest. To do this, a company must: Institutional fund management is fund management conducted by large financial firms such as banks, insurance companies and major investment organisations (e. ... This article is about the business definition. ... Topics in finance include: // Finance an overview Arbitrage Capital (economics) Capital asset pricing model Cash flow Cash flow matching Debt Default Consumer debt Debt consolidation Debt settlement Credit counseling Bankruptcy Debt diet Debt-snowball method Discounted cash flow Financial capital Funding Financial modeling Entrepreneur Entrepreneurship Fixed income analysis Gap financing... In finance, a portfolio is a collection of investments held by an institution or a private individual. ...

  • Identify relevant objectives and constraints: institution or individual goals, time horizon, risk aversion and tax considerations;
  • Identify the appropriate strategy: active v. passive -- hedging strategy
  • Measure the portfolio performance

Financial management is duplicate with the financial function of the Accounting profession. However, financial accounting is more concerned with the reporting of historical financial information, while the financial decision is directed toward the future of the firm. ... The field of accounting that serves external decision makers, such as stockholders, suppliers, banks and government agencies See also: Management accounting field of accounting concerned with external users of a companys financial information. ...


Capital

Main article Financial capital

Capital, in the financial sense, is the money which gives the business the power to buy goods to be used in the production of other goods or the offering of a service. In brief, financial capital is money used by entreprenuers and businesses to buy what they need to make their products (or provide their services). ... Not to be confused with capitol. ...


Sources of capital

  • Medium Term - usually between 2 and 7 years
  • Short Term - usually under 2 years
    • Bank Overdraft
    • Trade Credit
    • Deferred Expenses
    • Factoring

This article is about the legal mechanism used to secure property in favor of a creditor. ... In accounting, retained earnings are profits that were not paid to a companys shareholders as dividends. ... Venture capital is a general term to describe financing for startup and early stage businesses as well as businesses in turn around situations. ... In finance, a debenture is a long-term debt instrument used by governments and large companies to obtain funds. ... Project finance is the financing of long-term infrastructure and industrial projects based upon a complex financial structure where project debt and equity are used to finance the project, and debt is repaid using the cashflow generated by operation of the project, rather than the general assets or creditworthiness of... This article is about a property agreement in private law. ... Hire purchase (frequently abbreviated to HP) is the legal term for a contract developed in the United Kingdom, and now found in India, Australia, New Zealand, and other states which have adopted the English law concept. ... In math, see Factorization. ...

Capital market
  • Long-term funds are bought and sold:
    • Shares
    • Debentures
    • Long-term loans, often with a mortgage bond as security
    • Reserve funds
    • Euro Bonds

Money market
  • Financial institutions can use short-term savings to lend out in the form of short-term loans:
    • Credit on open account
    • Bank overdraft
    • Short-term loans
    • Bills of exchange
    • Factoring of debtors

Borrowed capital

This is capital which the business borrows from institutions or people, and includes debentures:

  • Redeemable debentures
  • Irredeemable debentures
  • Debentures to bearer
  • Hardcore debentures

Own capital

This is capital that owners of a business (shareholders and partners, for example) provide:

  • Preference shares/hybrid source of finance
    • Ordinary preference shares
    • Cumulative preference shares
    • Participating preference share
  • Ordinary shares
  • Bonus shares
  • Founders' shares

Differences between shares and debentures

  • Shareholders are effectively owners; debenture-holders are creditors.
  • Shareholders may vote at AGMs and be elected as directors; debenture-holders may not vote at AGMs or be elected as directors.
  • Shareholders receive profit in the form of dividends; debenture-holders receive a fixed rate of interest.
  • If there is no profit, the shareholder does not receive a dividend; interest is paid to debenture-holders regardless of whether or not a profit has been made.
  • In case of dissolution of firms debenture holders are paid first as compared to shareholder.

Fixed capital

This is money which is used to purchase assets that will remain permanently in the business and help it to make a profit.


Factors determining fixed capital requirements
  • Nature of business
  • Size of business
  • Stage of development
  • Capital invested by the owners
  • location of that area

Working capital

This is money which is used to buy stock, pay expenses and finance credit.


Factors determining working capital requirements
  • Size of business
  • Stage of development
  • Time of production
  • Rate of stock turnover ratio
  • Buying and selling terms
  • Seasonal consumption
  • Seasonal production

The desirability of budgeting

Capital budget

This concerns fixed asset requirements for the next five years and how these will be financed.


Cash budget

Working capital requirements of a business should be monitored at all times to ensure that there are sufficient funds available to meet short-term expenses.


Management of current assets

Credit policy

Credit gives the customer the opportunity to buy goods and services, and pay for them at a later date.


Advantages of credit trade
  • Usually results in more customers than cash trade.
  • Can charge more for goods to cover the risk of bad debt.
  • Gain goodwill and loyalty of customers.
  • People can buy goods and pay for them at a later date.
  • Farmers can buy seeds and implements, and pay for them only after the harvest.
  • Stimulates agricultural and industrial production and commerce.
  • Can be used as a promotional tool.
  • Increase the sales.

Disadvantages of credit trade
  • Risk of bad debt.
  • High administration expenses.
  • People can buy more than they can afford.
  • More working capital needed.
  • Risk of Bankruptcy.

Forms of credit
  • Suppliers credit:
    • Credit on ordinary open account
    • Instalment sales
    • Bills of exchange
    • Credit cards
  • Contractor's credit
  • Factoring of debtors

Factors which influence credit conditions
  • Nature of the business's activities
  • Financial position
  • Product durability
  • Length of production process
  • Competition and competitors' credit conditions
  • Country's economic position
  • Conditions at financial institutions
  • Discount for early payment
  • Debtor's type of business and financial position

Credit collection

Overdue accounts
  • Cards arranged alphabetically in card index system
  • Attach a notice of overdue account to statement.
  • Send a letter asking for settlement of debt.
  • Send a second or third letter if first is ineffectual.
  • Threaten legal action.

Effective credit control
  • Increases sales
  • Reduces bad debts
  • Increases profits
  • Builds customer loyalty

Sources of information on creditworthiness
  • Business references
  • Bank references
  • Credit agencies
  • Chambers of commerce
  • Employers
  • Credit application forms

Duties of the credit department
  • Legal action
  • Taking necessary steps to ensure settlement of account
  • Knowing the credit policy and procedures for credit control
  • Setting credit limits
  • Ensuring that statements of account are sent out
  • Ensuring that thorough checks are carried out on credit customers
  • Keeping records of all amounts owing
  • Ensuring that debts are settled promptly

Stock

Purpose of stock control

  • Ensures that enough stock is on hand to satisfy demand.
  • Protects and monitors theft.
  • Safeguards against having to stockpile.
  • Allows for control over selling and cost price.

Stockpiling
Main article: Cornering the market

This refers to the purchase of stock at the right time, at the right price and in the right quantities. In business, cornering the market is an illegal attempt to buy up enough of a particular commodity to allow the price to be manipulated. ...


There are several advantages to the stockpiling, the following are some of the examples:

  • Losses due to price fluctuations and stock loss kept to a minimum
  • Ensures that goods reach customers timeously; better service
  • Saves space and storage cost
  • Investment of working capital kept to minimum
  • No loss in production due to delays

There are several disadvantages to the stockpiling, the following are some of the examples:

  • Obsolescence
  • Danger of fire and theft
  • Initial working capital investment is very large
  • Losses due to price fluctuation

Influence of stock management on rate of return
  • Right price
  • Right quantity
  • Right quality
  • Right place
  • Right time
  • Right property

Rate of stock turnover

This refers to the number of times per year that the average level of stock is sold. It may be worked out by dividing the cost price of goods sold by the cost price of the average stock level.


Determining optimum stock levels
  • Maximum stock level refers to the maximum stock level that may be maintained to ensure cost effectiveness.
  • Minimum stock level refers to the point below which the stock level may not go.
  • Standard order refers to the amount of stock generally ordered.
  • Order level refers to the stock level which calls for an order to be made.

Cash

Reasons for keeping cash
  • The transaction motive refers to the money kept available to pay expenses.
  • The precautionary motive refers to the money kept aside for unforeseen expenses.
  • The speculative motive refers to the money kept aside to take advantage of suddenly arising opportunities.

Advantages of sufficient cash
  • Current liabilities may be catered for.
  • Cash discounts are given for cash payments.
  • Production is kept moving.
  • Surplus cash may be invested on a short-term basis.
  • The business is able to pay its accounts timeously, allowing for easily-obtained credit.

Management of fixed assets

Depreciation

Depreciation is the decrease in the value of an asset due to wear and tear or obsolescence. It is calculated yearly to ensure realistic book values for assets.


Insurance

Main article: Insurance

Insurance is the undertaking of one party to indemnify another, in exchange for a premium, against a certain eventuality. Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. ...

Uninsurable risks
  • Bad debt
  • Changes in fashion
  • Time lapses between ordering and delivery
  • New machinery or technology
  • Different prices at different places
Requirements of an insurance contract
  • Insurable interest
    • The insured must derive a real financial gain from that which he is insuring, or stand to lose if it is destroyed or lost.
    • The item must belong to the insured.
    • One person may take out insurance on the life of another if the second party owes the first money.
    • Must be some person or item which can, legally, be insured.
    • The insured must have a legal claim to that which he is insuring.
  • Good faith
    • Uberrimae fidei refers to absolute honesty and must characterise the dealings of both the insurer and the insured.

Shared Services

There is currently a move towards converging and consolidating Finance provisions into shared services within an organization. Rather than an organization having a number of separate Finance departments performing the same tasks from different locations a more centralized version can be created. Shared Services are the convergence and streamlining of an organisation’s functions to ensure that they deliver the organisation the services required of them as effectively and efficiently as possible. ...


Finance of states

Main article: Public finance

Country, state, county, city or municipality finance is called public finance. It is concerned with This article does not cite any references or sources. ...

  • Identification of required expenditure of a public sector entity
  • Source(s) of that entity's revenue
  • The budgeting process
  • Debt issuance (municipal bonds) for public works projects

In the United States, a municipal bond (or muni) is a bond issued by a state, city or other local government, or their agencies. ...

Financial economics

Main article: Financial economics

Financial economics is the branch of economics studying the interrelation of financial variables, such as prices, interest rates and shares, as opposed to those concerning the real economy. Financial economics concentrates on influences of real economic variables on financial ones, in contrast to pure finance. Financial economics is the branch of economics concerned with resource allocation over time. ... Face-to-face trading interactions on the New York Stock Exchange trading floor. ... In computer science and mathematics, a variable is a symbol denoting a quantity or symbolic representation. ... In economics and business, the price is the assigned numerical monetary value of a good, service or asset. ... An interest rate is the price a borrower pays for the use of money he does not own, and the return a lender receives for deferring his consumption, by lending to the borrower. ... In economics, the distinction between nominal and real numbers is often made. ...


It studies:

  • Valuation - Determination of the fair value of an asset
    • How risky is the asset? (identification of the asset appropriate discount rate)
    • What cash flows will it produce? (discounting of relevant cash flows)
    • How does the market price compare to similar assets? (relative valuation)
    • Are the cash flows dependent on some other asset or event? (derivatives, contingent claim valuation)
  • Financial markets and instruments
    • Commodities - topics
    • Stocks - topics
    • Bonds - topics
    • Money market instruments- topics
    • Derivatives - topics

Financial Econometrics is the branch of Financial Economics that uses econometric techniques to parameterise the relationships. Topics in finance include: // Finance an overview Arbitrage Capital (economics) Capital asset pricing model Cash flow Cash flow matching Debt Default Consumer debt Debt consolidation Debt settlement Credit counseling Bankruptcy Debt diet Debt-snowball method Discounted cash flow Financial capital Funding Financial modeling Entrepreneur Entrepreneurship Fixed income analysis Gap financing... In finance, cash flow refers to the amounts of cash being received and spent by a business during a defined period of time, usually tied to a specific project. ... Topics in finance include: // Finance an overview Arbitrage Capital (economics) Capital asset pricing model Cash flow Cash flow matching Debt Default Consumer debt Debt consolidation Debt settlement Credit counseling Bankruptcy Debt diet Debt-snowball method Discounted cash flow Financial capital Funding Financial modeling Entrepreneur Entrepreneurship Fixed income analysis Gap financing... Topics in finance include: // Finance an overview Arbitrage Capital (economics) Capital asset pricing model Cash flow Cash flow matching Debt Default Consumer debt Debt consolidation Debt settlement Credit counseling Bankruptcy Debt diet Debt-snowball method Discounted cash flow Financial capital Funding Financial modeling Entrepreneur Entrepreneurship Fixed income analysis Gap financing... Topics in finance include: // Finance an overview Arbitrage Capital (economics) Capital asset pricing model Cash flow Cash flow matching Debt Default Consumer debt Debt consolidation Debt settlement Credit counseling Bankruptcy Debt diet Debt-snowball method Discounted cash flow Financial capital Funding Financial modeling Entrepreneur Entrepreneurship Fixed income analysis Gap financing... Topics in finance include: // Finance an overview Arbitrage Capital (economics) Capital asset pricing model Cash flow Cash flow matching Debt Default Consumer debt Debt consolidation Debt settlement Credit counseling Bankruptcy Debt diet Debt-snowball method Discounted cash flow Financial capital Funding Financial modeling Entrepreneur Entrepreneurship Fixed income analysis Gap financing... Topics in finance include: // Finance an overview Arbitrage Capital (economics) Capital asset pricing model Cash flow Cash flow matching Debt Default Consumer debt Debt consolidation Debt settlement Credit counseling Bankruptcy Debt diet Debt-snowball method Discounted cash flow Financial capital Funding Financial modeling Entrepreneur Entrepreneurship Fixed income analysis Gap financing... Topics in finance include: // Finance an overview Arbitrage Capital (economics) Capital asset pricing model Cash flow Cash flow matching Debt Default Consumer debt Debt consolidation Debt settlement Credit counseling Bankruptcy Debt diet Debt-snowball method Discounted cash flow Financial capital Funding Financial modeling Entrepreneur Entrepreneurship Fixed income analysis Gap financing... Topics in finance include: // Finance an overview Arbitrage Capital (economics) Capital asset pricing model Cash flow Cash flow matching Debt Default Consumer debt Debt consolidation Debt settlement Credit counseling Bankruptcy Debt diet Debt-snowball method Discounted cash flow Financial capital Funding Financial modeling Entrepreneur Entrepreneurship Fixed income analysis Gap financing...


Financial mathematics

Main article: Financial mathematics

Financial mathematics is a main branch of applied mathematics concerned with the financial markets. Financial mathematics is the study of financial data with the tools of mathematics, mainly statistics. Such data can be movements of securities—stocks and bonds etc.—and their relations. Another large subfield is insurance mathematics. Mathematical finance is the branch of applied mathematics concerned with the financial markets. ... For other meanings of mathematics or uses of math and maths, see Mathematics (disambiguation) and Math (disambiguation). ... This article is about the field of statistics. ... For other uses, see Stock (disambiguation). ... For alternative meanings, see bond (a disambiguation page). ... 2003 US mortality (life) table, Table 1, Page 1 Actuarial science applies mathematical and statistical methods to finance and insurance, particularly to the assessment of risk. ...


Experimental finance

Main article: Experimental finance

Experimental finance aims to establish different market settings and environments to observe experimentally and provide a lens through which science can analyze agents' behavior and the resulting characteristics of trading flows, information diffusion and aggregation, price setting mechanisms, and returns processes. Researchers in experimental finance can study to what extent existing financial economics theory makes valid predictions, and attempt to discover new principles on which such theory can be extended. Research may proceed by conducting trading simulations or by establishing and studying the behaviour of people in artificial competitive market-like settings. The goals of experimental finance are to establish different market settings and environments to observe experimentally and analyze agents behavior and the resulting characteristics of trading flows, information diffusion and aggregation, price setting mechanism and returns processes. ... The goals of experimental finance are to establish different market settings and environments to observe experimentally and analyze agents behavior and the resulting characteristics of trading flows, information diffusion and aggregation, price setting mechanism and returns processes. ...


Quantitative behavioral finance

Main article: Quantitative behavioral finance

Quantitative Behavioral Finance is a new discipline that uses mathematical and statistical methodology to understand behavioral biases in conjunction with valuation. Some of this endeavor has been lead by Gunduz Caginalp (Professor of Mathematics and Editor of Journal of Behavioral Finance during 2001-2004) and collaborators including Vernon Smith (2002 Nobel Laureate in Economics), David Porter, Don Balenovich, Vladimira Ilieva, Ahmet Duran, Huseyin Merdan). Studies by Jeff Madura, Ray Sturm and others have demonstrated significant behavioral effects in stocks and exchange traded funds. Quantitative Behavioral Finance is a new discipline that uses mathematical and statistical methodology to understand behavioral biases in conjunction with valuation. ... Gunduz Caginalp is an American mathematician, currently a professor at the University of Pittsburgh. ... The Journal of Behavioral Finance is a peer-reviewed journal that publishes research related to the field of behavioral finance. ... Vernon L. Smith is professor of economics and law at George Mason University, a research scholar in the Interdisciplinary Center for Economic Science, and a Fellow of the Mercatus Center all in Arlington, Virginia. ...


The research can be grouped into the following areas:
1. Empirical studies that demonstrate significant deviations from classical theories.
2. Modeling using the concepts of behavioral effects together with the non-classical assumption of the finiteness of assets.
3. Forecasting based on these methods.
4. Studies of experimental asset markets and use of models to forecast experiments.


Related Professional Qualifications

There are several related professional qualifications in finance, that can lead to the field: A professional certification, trade certification, or professional designation often called simply certification or qualification is a designation earned by a person to certify that he is qualified to perform a job. ...

Accountant, or Qualified Accountant, or Professional Accountant, or Accountancy Practitioner, is an accountancy and financial experts legally certified in different jurisdictions to originally worked only in public practices, selling advice and services to other individuals and businesses, but today in addition many work within private corporations, financial industry and government... Chartered Certified Accountant (Designatory letters ACCA or FCCA) is a United Kingdom chartered accounting designation awarded by the Association of Chartered Certified Accountants (ACCA) The term Chartered Certified Accountant was introduced in 1996. ... The Association of Chartered Certified Accountants (ACCA) is a British chartered accountancy body with a global presence that offers the Chartered Certified Accountant (Designatory letters ACCA or FCCA) qualification worldwide. ... Chartered Accountant (CA) is the title used by members of certain professional accountancy associations in the British Commonwealth countries and Ireland. ... Certified Accountant redirects here. ... Accountancy (profession)[1] or accounting (methodology) is the measurement, statement or provision of assurance about financial information primarily used by managers, investors, tax authorities and other decision makers to make resource allocation decisions within companies, organizations, and public agencies. ... Cost accounting or cost control professional designation offered by the AAFM â„¢ American Academy of Financial Managementâ„¢ The CCA â„¢ is a Graduate Post Nominal (GPN) that is only available for accountants with an accredited degree, MBA, Chartered Accountant License, law degree, CPA, PhD or specialized executive training. ... The American Academy of Financial Management â„¢, or AAFM â„¢ as it is known, is a professional association dedicated to the finance sector and finance professionals. ... MBA redirects here. ... The degree of Doctor of Business Administration (D.B.A.) is a research doctorate that focuses upon business practice. ... Chartered Financial Analyst (CFA) is a professional designation offered by the CFA Institute (formerly known as AIMR) to financial analysts who complete a series of three examinations and work for at least four years in the investment decision making process. ... Certified International Investment Analyst (CIIA) is a designation offered by the Association of Certified International Investment Analysts (ACIIA) to professional financial analysts; candidates may be financial analysts, portfolio managers and or investment advisors. ... The Association of Corporate Treasurers (or ACT for short) was founded in 1979. ... Master of Science in Finance MSF is typically a one-year, non-thesis graduate program designed to prepare graduates for careers in financial analysis, investment management and corporate finance. ... CMA Certified and Chartered Market Analyst â„¢ Financial and Market Analysis professional designation offered by the AAFM â„¢ American Academy of Financial Managementâ„¢ Also known as the FAD Financial Analyst Designate credential. ... Master of Quantitative Finance is a masters degree in quantitative finance for finance professionals. ... Master of Computational Finance(MCF) is focused on the use of quantitative methods and information technology in the field of finance. ...

See also

Main lists: List of basic finance topics and List of finance topics

Finance studies and addresses the ways in which individuals, businesses and organizations raise, allocate and use monetary resources over time, taking into account the risks entailed in their projects. ... Topics in finance include: // Finance an overview Arbitrage Capital (economics) Capital asset pricing model Cash flow Cash flow matching Debt Default Consumer debt Debt consolidation Debt settlement Credit counseling Bankruptcy Debt diet Debt-snowball method Discounted cash flow Financial capital Funding Financial modeling Entrepreneur Entrepreneurship Fixed income analysis Gap financing... Economics Nobel Laureate Daniel Kahneman, was an important figure in the development of behavioral finance and economics and continues to write extensively in the field. ... Bridge financing is a method of financing, used by companies before their initial public offering, to obtain necessary cash for the maintenance of operations. ... Economic calendar is a type of calendar that is intended to inform financiers and traders about the scheduled major economic numbers (like CPI, PMI, Jobless Claims), government reports and speeches of the most influential persons of the financial world. ... A financial plan is a written analysis of an individuals financial circumstances developed by a financial planner, in light of the individuals goals, resources, and current tax law, investment options, and insurance needs. ... Categories: Possible copyright violations ... Forex can relate to: Foreign Exchange - an abbreviation for Foreign Exchange, often used in relation to currency exchange markets. ... Funding or financing is to provide capital (funds), which means money for a project, a person, a business or any other private or public institutions. ... This is a list of important publications in economics, organized by field. ... A shop window in Falls Church, Virginia advertises payday loans. ... The concept of right-financing was coined by English Political Economist Dr. Peter Middlebrook to highlight the importance of adopting the appropriate policy, institutional and financial support mechanisms to maximize sustainable returns on both public and private investments over time. ... Settlement (of securities) is the process whereby securities or interests in securities are delivered, usually against payment, to fulfill contractual obligations, such as those arising under securities trades. ...

External links

Look up Finance in
Wiktionary, the free dictionary.
  • Wharton Finance Knowledge Project - aimed to offer free access to finance knowledge for students, teachers, and self-learners.
  • For material covering three areas in finance - corporate finance, valuation and investment management, see Prof. Aswath Damodaran
  • For links to finance web sites, grouped by topic see Web Sites for Discerning Finance Students, Prof. John M. Wachowicz-
  • For the introductory finance web site at the University of Arizona, studyfinance.com
  • For introductory articles, a full glossary and links to resources on behavioral finance see the BF gallery
  • For the law of the financial markets see SECLaw.com
  • For stock market related financial definitions see TheStreet.com Glossary
  • The Finance Director provides access to essential suppliers of financial services and solutions
  • Director of Finance Online features news and industry information specific to senior finance professionals within the UK
Wiktionary (a portmanteau of wiki and dictionary) is a multilingual, Web-based project to create a free content dictionary, available in over 151 languages. ... The University of Arizona (UA or U of A) is a land-grant and space-grant public institution of higher education and research located in Tucson, Arizona, United States. ...

  Results from FactBites:
 
Finance - Wikipedia, the free encyclopedia (1159 words)
The activity of finance is the application of a set of techniques that individuals and organizations (entities) use to manage their financial affairs, particularly the differences between income and expenditure and the risks of their investments.
Finance is used by individuals (personal finance), by governments (public finance), by businesses (corporate finance), etc., as well as by a wide variety of organizations including schools and non-profit organizations.
In the case of a company, managerial finance or corporate finance is the task of providing the funds for the corporations' activities.
  More results at FactBites »

 
 

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