Finance is the science of funds management. This is an essential branch of mathematics that deals with the economic concepts of supply, demand, pricing, risk, and monetary systems. The emphasis in finance is on how money markets are managed, where money is made, how it is lent, and how it is spent.
In this main article, we will discuss some interesting topics concerning financial economics. One of the most important economic concepts is demand analysis. In order to understand economic theories, one needs to understand what drives the demand. For example, when people are purchasing items, they need to be able to determine how much the item will cost them, how long it will take them to pay for it, how much they can spend on it, and what the various incentives are. All of these topics are important in economics.
Another important branch of finance is personal finance. Personal finance refers to the behaviour of money within the individual’s or family’s financial activities. It also includes insurance and taxation issues. The three main branches of personal finance are personal income, savings and lending, and business and financial activities.
Within the personal finance subcategories of savings and lending, one can consider checking accounts, certificates of deposits, savings plans, individual and family bonds, credit cards, merchant banking, money markets, loans, investment, and insurance. Another three main subcategories of finance are industrial, business, and financial services sectors. Within the business sector, there are also four main subcategories, finance, information technology, energy, and health care subcategories. Within the information technology subcategory, subcategories include computer science, engineering, and information technology.
As previously mentioned, the third subcategory of finance is the finance of debts. Debt finance refers to the provision of finance to facilitate the payment of debts. Some of the financial services sectors that deal with debt finance are banks, lending institutions, credit unions, consumer finance, mortgage banking, non-traditional financial vehicles, and mortgage banking. The money management subcategory includes managing money for retirement, investing for retirement, managing money during emergency situations such as loss of employment and medical expenses, personal finance, and finance for children and other dependents.
Finance and financial risk management are closely related and can be characterized as a blend of techniques used to improve the efficiency of the finance system and avert financial crisis. Finance risk management encompasses risk management, identification of financial risks, allocation of resources, and the execution of plans to avoid financial crisis. All these techniques form a complete methodology of financial risk management. Apart from the formalism, the discipline of finance and financial risk management requires a solid theoretical base and application of techniques such as economic theory, decision theory, and the theory of portfolio management.