What Is Finance?

Finance is a broad term that describes activities associated with banking, leverage or debt, credit, capital markets, money, and investments. Basically, finance represents money management and the process of acquiring needed funds. Finance also encompasses the oversight, creation, and study of money, banking, credit, investments, assets, and liabilities that make up financial systems.

Many of the basic concepts in finance originate from micro and macroeconomic theories. One of the most fundamental theories is the time value of money, which essentially states that a dollar today is worth more than a dollar in the future.

Key Takeaways

  • Finance encompasses banking, leverage or debt, credit, capital markets, money, investments, and the creation and oversight of financial systems.
  • Basic financial concepts are based on micro and macroeconomic theories. 
  • The finance field includes three main subcategories: personal finance, corporate finance, and public (government) finance.
  • Financial services are the processes by which consumers and businesses
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