Finance means provision of funds or loans to an individual or company. This is often used for studying Economics and how money should be controlled. The private corporations along with public sector make use of this term whenever their business assets are discussed. Finance management is a specialized branch in financial sector that is carried out by the finance managers. The managers are responsible for arranging funds that needs to be lent out to individuals or business by using company’s assets and not sourcing the money anywhere else. The whole focus behind optimization is to get maximum returns on finance and ensuring that the cost remains minimum. The lives of individual revolve around finance and its effects are seen globally if there is poor management with decrease in production and sales. The work of finance manager is to maximize profits while keeping minimum risks when there is high level of stress associated with it.
Role of lenders in the business:
The lenders are generally not happy when they don’t know what exactly they are funding. This is one major concern among all the small business owners. But they should be very focused on their business as it helps in creating a better frame of mind for future. The small businesses can finance their needs from some other source like banks and other private lenders. The lenders can make profits from this as business loans are bit expensive and it increases the returns of the finance company and offsets their potential problems. Banks are institutions that prefer lending money at a preferential rate of interest. To be on top, you need to survive the emerging technologies and changes in industry. Look for professionals within an area that provides harmony between functional and theoretical lessons.
What is Economics all about?
We are not going to follow the academic definition. Economics is a social science that deals with production, consumption and distribution of goods and services. It aims to explain how economy works and how their agents work. Although it is called social science, it is treated as liberal arts and it is very qualitative and math oriented.
Why is economics useful?
When economists succeed in understanding the reaction of consumers and producers in changing conditions, it provides best guidance and also influences making of policy at national level. There are many real consequences of different approaches of taxation, government spending and regulations. Economics advices and analyzeall these decisions. Economics helps the investors to understand ramification of national policy and events of business conditions. It gives investors tools for predicting macroeconomic conditions and helps them to understand implications of predictions on companies, stock and market conditions. For projects, proper knowledge of government policies should be done as it chokes off inflation and growth in the country and helps stock and bond investors to position themselves most appropriately.
Economics as a career:
Those who want to pursue Economics as a career should consider academia. Academics is not only spending time to teach students the principles of Economics but it also has to do with researching within the field and formulating theories and explanations as to how markets work with their agents. The economists are greatly demanded in the corporate world. The concerns of economists are more immediate in near future. The economists who work for investment banks, consultancy and corporations focus mainly on forecasting growth, interest rates and inflation. These projections represents that the products in their own rights or input for managers and all the decision makers in the company.
Economics in market
The investors have erratic history with economists, so you should listen to them carefully. Many investors ignore economist’s concern and pile up their investment in the booming sector. They carefully track data of GDP, inflation and deficits to inform their decision for making any investment. After considering the market, the bond investors tend to pay more attention to the economic data than the equity investors.
What is finance all about?
Finance is outgrowth of economics and many notable achievements in finance made by individuals with economic background or position as professors. Finance focuses on price, interest rates, money flows and financial market. Finance deals more with time value of money, capital, financial structure, risks and rates of return.
How can finance be useful?
Economics offers full explanation about fair price of any product by intersecting supply, demand, marginal cost and marginal utility. People who want to make billions of dollars are at stake as they have to make proper pricing of loan, deposit, insurance policies and many other things. Finance establishes theoretical understanding and actual model allows pricing for risk and valuation of cash flow. Finance informs all the business managers and investors how to evaluate business proposals and allocate capital efficiently. Economics teaches how to invest in a way to produce the best risk returns and figure out the whole process.
Finance as a career:
A certain degree or academic background in finance opens up many doors for individuals and it is beneficial for those who have similar background in the subject. A degree in finance can lead to become a good analyst, banker or fund manager. A degree can be pathway into the career of senior management of companies.
Finance in the market
Finance assesses the value of financial instruments and it is one of the most common applications of finance in the market as it determines the fair value for various investment products. Some stock pricing models like asset pricing, black scholes and bond concepts can be applied to finance in context to investment. Many new theories come in finance and it guides you the right way to do things. It may be optimal dividend or debt policy or proper allocation strategy for assets. Finance affects the working of market as there is constant stream of new products. There are many derivatives and advanced financial products to solve market demands and needs. It is important to known about financial market and economy from time to time to make better decisions.