Finance is a broad term covering many things about the study, generation, and management of funds and investments. In particular, it mainly deals with the issues of why and how an individual, firm or governmental agency gets the funds required for their activities (called capital in the business context), and how they use or allocate those funds. Finance also looks into the allocation and management of public funds. It also takes into consideration issues of debt and its management. Finally, finance considers the effect of changes in interest rates on the supply of funds.
The major parts of the broad field of finance include governmental organizations, corporations, non-profit organizations, private individuals and other institutions. Governmental organizations typically are concerned with taxes and spending, but they also look into the allocation of funds. Corporations, non-profit organizations and other businesses normally have different concerns and require different policies, but some of them can be applied to all of them as long as they are operating within a specific framework of regulations.
Modern financial theories describe many of these issues in much greater detail, drawing on both traditional and contemporary research and on current practice. These include asset pricing theories, cash flow theories, asset-pricing theories, asset pricing models, financial analysis, financial decision making, investment banking, financial institutions, economic growth, economic analysis, macroeconomics, microeconomics, the theory of demand, monetary policy, budgeting, financial management, financial risk management, portfolio management, and risk management. There are also cross-disciplinary studies that apply different methods of accounting to solve some of the problems mentioned above. These include industrial and organizational psychology, decision sciences, financial markets, financial technology, decision sciences, mathematics, engineering, health, marketing, political science, psychology, and sociology.
Today, finance has become a major preoccupation for nearly everyone with advanced education. In addition, most occupations in finance require some sort of financial training at some point during their careers. Finance graduates often go on to become investment bankers or Wall Street investors, working to make a profit on their clients’ investments. Finance analysts sometimes go on to become government employees, financial managers, insurance brokers or mortgage brokers.
Besides basic finance courses, students can take specialized classes that focus on one particular aspect of the subject such as pensions, savings and investment, individual portfolios, venture capital, risk management and globalization. Students may also choose to specialize in any of a number of areas, such as pensions, bonds, savings and investment, real estate, entrepreneurship, corporate finance, international finance and social finance. As well, many students choose to specialize in one of the many different areas of specialization within the larger field of economics. Some examples include behavioral finance, macroeconomics, microeconomics, asset pricing, fiscal policy, financial markets, international trade and financial systems.
Finance graduates can also choose to be employed by professional investment banks or private investment firms. Many financial advisors work directly with corporations to provide investment advice and assistance. Others work as general accountants in the corporate world or in investment banking. Many finance professionals also find employment in investment management firms, which provide money management and risk management services to corporations as well as individuals.