Loading the player...
A:

"Finance" is a broad term that describes two related activities: the study of how money is managed and the actual process of acquiring needed funds. Because individuals, businesses and government entities all need funding to operate, the field is often separated into three sub-categories: personal finance, corporate finance and public finance.

All three categories are concerned with activities such as pursuing sound investments, obtaining low-cost credit, allocating funds for liabilities, and banking. Yet each has its own specific considerations. For example, individuals need to provision for retirement expenses, which means investing enough money during their working years and ensuring that their asset allocation fits their long-term plans. A large company, on the other hand, may have to decide whether to raise additional funds through a bond issue or stock offering. Investment banks may advise the firm on such considerations and help them market the securities.

As for public finance, in addition to managing money for its day-to-day operations, a government body also has larger social responsibilities. Its goals include attaining an equitable distribution of income for its citizens and enacting policies that lead to a stable economy.

RELATED FAQS
  1. What are the benefits for a company using equity financing vs. debt financing?

    Learn what some of the principal advantages are for a company that chooses to utilize equity financing in preference to debt ... Read Answer >>
  2. What steps are necessary for a business to secure equity financing?

    Understand the steps necessary for a small business to secure equity financing for working capital, financing expansion or ... Read Answer >>
  3. Other than accounting, what does a corporate finance job involve?

    Understand the various levels of positions and titles of a corporate finance job. Learn what a corporate finance job involves ... Read Answer >>
  4. How can an investment banker switch to a career in corporate finance?

    Understand the difference between investment banking and corporate finance. Learn how an investment banker can switch to ... Read Answer >>
  5. What type of companies use downround financing?

    Read about the types of companies that are most likely to rely on down round financing, and why existing shareholders don't ... Read Answer >>
  6. How does additional equity financing affect existing shareholders?

    Learn about how equity financing affects existing shareholders. By issuing and selling shares on the open market, equity ... Read Answer >>
Related Articles
  1. Small Business

    What is Equity Financing?

    Companies that are short on cash may need financing to pay for short-term needs or long-term capital expenditures.
  2. Small Business

    What Does Corporate Finance Do?

    Corporate finance is the subset of finance that involves how corporations use leverage to fund their operations and capital purchases.
  3. Small Business

    Is Equity Financing the Right Choice for Your Business?

    Discover the benefits and drawbacks of equity financing for a small business, and learn when equity financing should be used instead of debt financing.
  4. Small Business

    Small Business Financing: Debt Or Equity?

    There are two sources of financing for small businesses: debt and equity financing. This article explains both.
  5. Small Business

    When Wholesale Funding Goes Bad

    The wholesale funding process is extremely dependent on the credit markets. Therefore, it is not always the best option for a business.
  6. Investing

    Yahoo! Finance Vs. Google Finance: Which Should You Use?

    Thanks to sites like Yahoo Finance and Google Finance, millions of investors are able to analyze markets on their own.
  7. Financial Advisor

    The Best Way To Borrow

    There are many avenues from which to drum up funding. Find out the pros and cons of each.
  8. Investing

    What's Trade Finance?

    Essentially, trade finance makes it possible and easy for exporters and importers to trade, and its expansion has accommodated a massive international trade growth.
  9. Investing

    The Pros And Cons Of Target-Date Funds

    These accounts will take charge of your retirement savings, but should you let them?
  10. Managing Wealth

    Should Balanced Funds Be Part Of Your Portfolio?

    Find out why you should include balanced funds in your portfolio, including the importance of customizability, diversification and professional management.
RELATED TERMS
  1. Corporate Finance

    1) The financial activities related to running a corporation. ...
  2. Bankruptcy Financing

    Financing arranged by a company while under the chapter 11 bankruptcy ...
  3. Trade Finance

    The financing of international trade. Trade finance includes ...
  4. Owner Financing

    When a property buyer finances the purchase directly through ...
  5. Financing

    The act of providing funds for business activities, making purchases ...
  6. Series B Financing

    The second round of financing for a business by private equity ...
Hot Definitions
  1. Life Insurance

    A protection against the loss of income that would result if the insured passed away. The named beneficiary receives the ...
  2. Price Elasticity Of Demand

    A measure of the relationship between a change in the quantity demanded of a particular good and a change in its price. Price ...
  3. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  4. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Down Round

    A round of financing where investors purchase stock from a company at a lower valuation than the valuation placed upon the ...
Trading Center