in this slide we are going to talk about the basic question which comes to our mind and we talk about finance first question-
What is Finance?
It is basically management of money. Managing could be by individuals, in households, by governments, banks, corporates and financial institutions.
you can see that there are two components two important components in the definition one is managing money therefore finance involved with managing money and the other component is appropriate objective that means finance involve managing money with an appropriate objective in mind in this course we will discuss different aspects of managing money as well as about the appropriate objective what should be the appropriate objective in your mind when you are managing money finance is a wide area and it can be it can be thought in different context like from personal context government context or business context from personal context if you think about finance
or finance then it will be dealing with for example in what fixed assets should we invest our money how to raise money for the investment of management of money for personal objective for example if you are thinking about personal finance perhaps you will perhaps you will think about how to earn adequate amount of money how much money to spend and save how much to borrow if necessary how much money to invest if you have extra and if you want to increase your consumption in future where the in where to invest the money when to invest the money so these are the these are some examples of questions that you will answer if you are dealing with personal finance government context in government context the finance will be dealing with generating government revenue for example by deciding how much to tax public spending the amount of public spending budgeting government debt production distribution of public goods and if we think about business context
Why is finance required?
To conduct any economic activity Finance is a must, its like a back bone in humans. It is very difficult to undertake economic activity without finance. Imagine if you want to start a business, what is the first thing that you require to commence transactions, its finance.
There are several times when the words finance and accounts are interchangeably used. But they both are not the same and there is a difference in it. Basically Finance is a larger term than Accounts. Accounts is sub set of finance. Finance deals with management of money, whereas accounts deals with recording of day to day transactions and flow of money.
Types of finances
types of finances finances can be broadly classified into four branches choose
first personal finance personal finance means the daily utilization of finance man individual and households.
second banking banking here means the financial transactions undertaken by the banking institution these includes money ,lending accepting deposits merchant banking etc.
third corporates business houses also undertake various financial transactions such as routine day-to-day transactions raising capital borrowings advances and many such others
fourth government’s federal and state governments also conduct financial transactions such as collection of taxes provide subsidies public expenditure and etc now since we know basics and broad classifications.
Source
let’s understand from where these finances come from means let’s see the sources out of many sources there are five main sources which we shall see in this slide first retained earnings retained earnings means the accumulated profits for the period of time which are utilized in the business again second capital markets it means money raised by issue of equity and preferences in the primary market which is the first time issue or secondary market which is through stock markets these even include personal money introduced in the business third bank finance bank finance are short term or long term loans taken from banks for business or personal purposes fourth subsidies these are financial supports given primarily by governments to help businesses in specific sectors they can also be informed of rewards for discounts fifth corporate loans these are the money raised by businesses in the form of loans they are called by
different names such as bonds debentures or deposits these can be secured or unsecured and could be for short term long term for perpetual term it can be raised by private placement or public issue now since we know fundamentals of finance let’s see
the opportunities
which are available to financial professionals each area of opportunity will require specialized knowledge and qualifications first retail banking a competency in tax management consultancy corporate law compliance and risk accrual insurance trading fund management and investment these are some of the many opportunities
