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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 provision for retirement expenses, which means investing enough money during their working years and ensuring that their asset allocation fits their long-term plans. This type of financial management decision falls under personal finance.

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. Another instance could be a company that is trying to budget their capital and make decisions on what projects to finance and what projects to put on hold in order to grow the company. These types of decisions fall under corporate finance.

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.

Well, you're just getting started and there's more to finance. Read Complete Guide to Corporate Finance.

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