company, managerial
finance or corporate finance is the task of providing the
funds for the corporations activities. It generally involves
balancing risk and profitability. Long term funds would be
provided by ownership equity and long-term credit, often in
the form of bonds. These decisions lead to the company's capital
structure. Short term funding or working capital is mostly
provided by banks extending a line of credit.
On the bond market, borrowers
package their debt in the form of bonds. The borrower receives
the money it borrows by selling the bond, which includes a
promise to repay the value of the bond with interest. The
purchaser of a bond can resell the bond, so the actual recipient
of interest payments can change over time. Bonds allow lenders
to recoup the value of their loan by simply selling the bond.
Another business decision concerning
finance is investment, or fund management. An investment is
an acquisition of an asset in the hopes that it will maintain
or increase its value. In investment management - in choosing
a portfolio - one has to decide what, how much and when to
invest. In doing so, one needs to
Identify relevant objectives
and constraints: institution or individual - goals - time
horizon - risk aversion - tax considerations
Identify the appropriate strategy: active vs passive - hedging
strategy
Measure the portfolio performance
Financial management is duplicate with the financial function
of the Accounting profession. However, Financial Accounting
is more concerned with the reporting of historical financial
information, while the financial decision is directed toward
the future of the firm.
Shared Services
There is currently a move towards converging and consolidating
Finance provisions into shared services within an organization.
Rather than an organization having a number of separate Finance
departments performing the same tasks from different locations
a more centralized version can be created.
Finance of states
Country, state, county, city or municipality finance is called
public finance. It is concerned with
Identification of required expenditure
of a public sector entity
Source(s) of that entity's revenue
The budgeting process
Debt issuance (municipal bonds) for public works projects
Financial economics
Main article: Financial economics
Financial economics is the branch of economics studying the
interrelation of financial variables, s.a. prices, interest
rates and shares as opposed to those concerning the real economy.
Financial economics concentrates on influences of real economic
variables on financial ones, in contrast to pure finance.
It studies:
Valuation
- Determination of the fair value of an asset
How risky is the asset? (identification of the asset appropriate
discount rate)
What cash flows will it produce? (discounting of relevant
cash flows)
How does the market price compare to similar assets? (relative
valuation)
Are the cash flows dependent on some other asset or event?
(derivatives, contingent claim valuation)
Financial markets and instruments
Commodities - topics
Stocks - topics
Bonds - topics
Money market instruments- topics
Derivatives - topics
Financial institutions and regulation
The word hotel derives from the French hôtel, which
referred to a French version of a townhouse or any other building
seeing frequent visitors, not a place offering accommodation
(in contemporary usage, hôtel has the meaning of "hotel",
and hôtel particulier is used for the old meaning).
The French spelling (with the circumflex) was once also used
in English, but is now rare. The circumflex replaces the 's'
once preceding the 't' in the earlier hostel spelling, which
over time received a new, but closely related meaning.
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