Basic area of finance

 

Basic areas of finance 

 

More years ago, the area of finance was not so vast, only collection of sources was the area of finance. But nowadays area of finance is very large. Some main areas of finance are as under: 

 

i. Business finance: In the business there are different financial activities are done, such as capital budgeting, capital structure, working capital management, risk management. These activities of management cannot be done without financial knowledge. Therefore, the finance is very necessary for a business firm. 

 

ii. Investment: Investment means the investing of savings of Individuals and investing of institutional investors in different securities. such as shares, debentures, bond and mutual fund. For good investing investor should have to invest in right securities in right time and till right time. Investors should know about the whole financial market and marketing activities. Therefore, for investing, finance is very important. without the financial knowledge investor cannot be success. Therefore, investment is also area of finance. 

 

iii. Institutional finance/financial market and institutions: The market where the different securities are traded is called financial market, and the group of organization which involve in the financial market are called institutions. In this field also the financial activities are done, such as savings are collected and used where necessary, stock exchange activities are done, finding out the current and future market situation. In this way to do these activities the financial knowledge should be necessary. 

 

iv) international finance: International finance means the financial information about the next countries. Nowadays due to development of international market, the companies are sold their product in different countries. Therefore, the business man has to know about the next countries financial situation where they sell their goods and services. such as monetary policies, international trade rules, tax rate, international interest rate, international financial market, international exchange rate, money inflation. so, these types of information only received from financial information. Therefore, area of finance is international finance also. 

 

v.  Public finance: public finance means the finance of government, Where the government of country do different financial activities. The government collect different Income sources such as taxes, internal and external debt. After collecting the fund government uses it for developing the countries, such as making road, school, collage, hospital, sources of water, electricity etc. For these activities government also should know about finance. Besides this the government makes the different financial policies i.e.. tax policies, monetary policies, national and internation trade policies. So, these types of financial activities or finance is called public finance. Therefore, we can say that the area of finance is public finance also.