Basic of Finance and its Overview - Students Explore

Basic of Finance and its Overview

What is Finance

Finance is the system of exchange funds among lenders, borrowers, and investors. In other words, you can say It is the Management of money.


Types of Finance

There are mainly two types of Finance:

  1. Debt Finance

It is the cash that you obtain to maintain your business is known as debt finance. It is further divided into three categories, listed below:

  • Short Term Debt Financing
  • Medium Term Debt Financing
  • Long Term Debt Financing


  1. Equity Finance

It is a traditional way of raising capital for businesses by issues or offering company shares. This medium is one of the significant differences in equity finance from debt finance.

There are other types of Finance too, listed below:

  1. Personal
  2. Corporate
  3. Public


Personal Finance

It is particular to an individual’s condition and activity. Therefore, financial strategies depend mainly on the person’s living requirements, earnings, desires, and goals.


Corporate Finance

Its financial activities are related to running a corporation, usually with a department established to supervise those financial activities.


Public Finance

It includes spending, tax, budgeting, and debt-issuance policies that influence how a government pays for the services it provides to the public.


Components of Financial System

Components of Financial system are explained below.

Financial Services

Services that are provided by financial institutions and cover a broader aspect of managing money, banks, debit cards, credit cards, consumer finance, investment funds,  stock brokerage are called financial services.


Financial Market

Financial Market is a place where currencies, equities, and bonds are traded in the market.  Financial Market is broken down into two categories.

  1. Primary market
  2. Secondary market.


Financial Instruments

Financial instruments are the assets that can be traded in the market. This asset may be of any form from cash to a contractual right to receive and deliver the cash. They are usually financial contracts between the two firms. Also, these instruments can be customized, traded, or completed.


Financial Institutions

Financial institutions include banks and other non-finance banking institutions. It is a company engaged in economic and financial transactions like deposits, loans, and investments. A bank is a financial institution that is legally allowed to borrow and lend money. Banks consist of various banking operations like trusting brokerage firms, companies insurance, companies, and dealers.

There are more than 5,000 banks in America. Such as Bank of America Corp, Fifth Third Bank, Truist Bank, Citigroup Inc., HSBC, etc.


Areas of Finance

There are three areas, explained below.

Financial Management

Financial Management is the study of ways in which managers obtain funds, manage working capital, and allocate funds to long-term investments.  Every firm, no matter how small, needs someone to manage funds.  A manager also uses financial information to assess the strategies of the firm and to assess whether the firm is achieving its objectives.

Financial Marketing and Institutions

Financial Markets and Institutions is the study of money markets (short-term debt) and capital markets (long-term debt and equity).  Attention is given to the manner in which financial traders behave in a global market; the role played in the financial market by different financial institutions (commercial banks, credit unions, investment banks); and the effects upon the financial system of national and international policymakers.


Investment is the study of techniques used by individuals to manage portfolios and provide financial planning.


A Career in Finance’s Department / Subject

Finance has a vast variety of careers throughout the world in different private and public sectors. Finance’s Students may get employed in Commercial Banks, Investment Banks, Treasury Offices, Audit, Insurance companies, Accounting departments, Wealth Management, Corporate,  Equity Researhc, Financial Planning, and personal banking, etc.

Thank You.

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  1. January 9, 2022

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