Finance is a generic term for things about the science, development, and implementation of financial products and investments. In particular, it concerns the questions of who, what, when and where an individual, organization or government obtains the funds necessary to engage in the actions associated with those activities (called capital in the business context). It also covers situations in which people, companies and governments borrow external funds to create credit, issue equity or common stock, repurchase other securities, retain other assets or pay employees. All these require knowledge and expertise about financial markets, including what they are, why they are important, and what they do.
Finance is the study of the relationship between borrowers and lenders. The concepts and principles of finance are not unique to Business / Accountancy / Economics / Law / Public Sector / Economists; the discipline is broad and deep, extending over many special fields. So, if you are thinking of taking an alternative investment exam, you will need to familiarize yourself with a wide range of areas.
The world of finance includes aspects of insurance, banking, investment, retailing, manufacturing, transportation, communications, and the fiscal framework that underlie them all. At its most basic level, finance includes the process by which individuals and institutions obtain and utilize credit. It also includes the process by which individuals and institutions to buy and sell securities, and use the proceeds to make investments and purchases. All these processes are vital to the functioning of the modern economy.
Another area of financial products is that which provides money for banks and other large institutions to make loans. A large portion of the money supply that is obtained each year is created through bank lending, both from commercial banks and from the government. Similarly, investment banking provides borrowers with loans for specific purposes, as well as for speculation. Public finance includes those aspects of public finance that deal with the provision of funds for specific projects, such as education, scientific research, and development, and the administration of public utilities.
Public businesses, such as corporations and other associations, may receive support in the form of grants from the government for projects related to their business. They may receive subsidies from various entities, such as the federal government or state and local governments. Corporate welfare programs, such as assistance with land and water rights, are also examples of public finance. Private nonprofit organizations may also obtain some support from the government in the form of grants. All these aspects of the private sector are included in the study of finance.
Businesses, as well as individuals, rely heavily on finance. A company without a healthy balance sheet is almost impossible to survive. In addition, to provide employment, businesses must also purchase equipment and property, employ workers, and make purchases of raw materials and products. Without proper financing options, some businesses may be unable to survive. While some aspects of the field of economics are not directly related to finance, they are intimately related to finance as it relates to business. The study of finance in economics and business therefore encompasses all these different areas of the economy.