Finance is a large field including a wide range of activities concerning the creation, management, and evaluation of financial resources and assets. Financial professionals can include bankers, accountants, financial planners, financial engineers, and investment managers. The main function of finance is to provide a framework for those who are planning to make a financial investment. This includes the transfer of financial resources between people, organizations, and the financial sector. There are many types of financial activities and businesses in the world today.
The largest industry in the finance field is banking. There are three major banks in the U.S., which are Bank of America, Chase Bank, and Wells Fargo. Other banks and lenders are involved in various activities as well. There are various ways to create and manage finances. Borrowers and investors can borrow funds from banks to purchase financial instruments such as stocks, bonds, securities, commercial real estate loans, and residential mortgages.
Another major type of financial activity is that of investment. Investment yields cash flows from the sale of assets, which then create new financial opportunities for those who bought the instruments. There are two main methods used to create capital structures and they are known as private capital structure and public capital structure. Private capital structure deals with borrowing from outside sources and investing in business enterprises.
Public finance is one of the other main types of financial activities. It deals with governmental organizations, such as the Federal Reserve Bank, the Small Business Administration, the Office of the Comptroller of the Currency, the National Institutes of Finance, and the Federal Reserve. The purpose of this activity is to ensure the efficient and effective functioning of the government as well as the safety of the citizens of the country. Banking is used to facilitate these purposes by providing money, credit lines, and other financial instruments to the government and other organizations.
Tax management is another important facet of public finance. Taxation is used to either benefit individuals directly or to support essential public programs. Some people argue that taxation should be eliminated since it serves no useful purpose in finance and that it is a waste of resources. However, this could not be farther from the truth; elimination of taxes would result in more wealth for the common person and this in turn would result in enhanced economic performance.
All forms of finance are very complex. They go far beyond simple money management. Therefore, it is essential for you to enroll in a formal finance course, like the Master of Science in Financial Management (Masters of Finance) program. This will equip you with the basic knowledge on how the different forms of finance are managed today. Once you learn about the basics, you will have a better understanding of the nature of the various financial markets and how they work.
