Different Types Of Finance
Finance is a broad term covering a range of things about the financial development, management, allocation, and evaluation of funds and securities. It is the subject of complex and varied research. The scope of finance is continuously widening as new theories and concepts are discovered and new approaches are developed. Finance is often used to refer loosely to any field that has something to do with the financial aspects of business activity. Some of the sectors that are most concerned with the subject are accounting, economics, finance, economics, law, banking, health, insurance, land, labor and technology. Other related subjects include taxation, which is about public policy, risk, securities, personal, corporate and household.
Today Finance has become a major player in all areas of economic activity. There are a large number of companies involved in the financial services sector offering a wide range of financial products and investment opportunities. The term financial goods is sometimes used interchangeably with financial services. Many of these companies deal with the day-to-day cash management, budgeting, risk management and strategic planning of individual and business accounts. They also provide assistance in the formation and structuring of investment portfolios.
Most of the firms in the finance line offer a wide range of financial products such as savings accounts, commercial, investment grade, bond, mortgage, equity, cash, financial products, market oriented, portfolio, managed funds, real estate, private equities, venture, swaapanese yen, securities, and derivatives. A wide range of financing products are also offered by foreign exchange brokers. These products cover everything from savings accounts to pension and social security accounts. Personal finance, corporate finance, and government finance fall under the realm of personal finance, while finance management is the broader term that encompasses all of these and more.
Corporate finance includes those aspects of an organization’s activities that are focused on achieving the best possible financial performance. This can be in regards to mergers and acquisitions, the improvement and expansion of the existing enterprise, or simply the prevention of financial loss in case of failure to meet certain financial targets. It can also include debt financing to achieve specific goals like expansion. Some examples of capitalizing activities under corporate finance include: purchasing companies, selling companies, developing companies, refinancing, acquiring other companies, and reorganizing.
Public finance refers to governmental activities undertaken by public agencies in support of the economic welfare of the nation as a whole or specific entities. Examples of public finance include: direct payments to individuals, grants, subsidies, loans, and insurance. Governmental organizations are categorized as public corporations depending upon their nature of business. The most popular forms of public finance are: Medicare and Medicaid, Social Security and Veteran’s Administration, gasoline tax, gasoline rebate, and student loans. The financing of retirement programs like 401(k) s is called private debt financing because the borrower is the State or Corporation and not the borrower is the lender.
Private finance is very different from public finance in terms of its target sector. Private finance, unlike the government, makes use of financial instruments other than cash. Examples of such financial instruments are stock market, bonds, mortgages, derivatives, insurance, and financial products. This is one reason why private enterprises differ from businesses in that they tend to generate their income from earnings and assets and not from cash flow.
Corporate finance refers to financial activities of companies. It includes issues regarding ownership structure of corporations, dividend policy, indirect financing, ownership structure of international organizations, capital budgeting, marketing strategies, ownership structure of companies in the main stream, financial attractiveness of corporations, corporate credit and acquisitions. In addition, it also includes indirect financing from the government and borrowing money from banks. Examples of corporate finance activities are: issuing shares to stockholders, receiving lease payments from tenants, issue of securities for issuance, issue of preferred stocks, issue of warrants, acquire and repurchase stocks, issue of partnership interests, the issue of stock options and common stock transactions.
Current financial position is all about estimating one’s probability to make a profit in the future. For an investor it includes the current financial position as well as the probable future financial position. It includes discount rates charged on trades, stock exchange rates, foreign exchange rates, interest rates and bond markets. It does not, however, include prospective future financial position of the shareholders.