Finance

Finance is a field that is concerned with the allocation (investment) of assets and liabilities over space and time, often under conditions of risk or uncertainty. Finance can also be defined as the art of money management. Participants in the market aim to price assets based on their risk level, fundamental value, and their expected rate of return. Finance can be split into three sub-categories: public finance, corporate finance and personal finance.[1]

Areas of finance

Personal finance

Matters in personal finance revolve around:

  • Protection against unforeseen personal events, as well as events in the wider economies
  • Transference of family wealth across generations (bequests and inheritance)
  • Effects of tax policies (tax subsidies or penalties) management of personal finances
  • Effects of credit on individual financial standing
  • Development of a savings plan or financing for large purchases (auto, education, home)
  • Planning a secure financial future in an environment of economic instability
  • Pursuing a checking and/or a savings account
  • Preparation for retirement/ long term expenses
Warren Buffett KU Visit
Warren Buffett CEO & chairman of Berkshire Hathaway, American investor, business magnate, and philanthropist. He is considered by some to be one of the most successful investors in the world.

Personal finance may involve paying for education, financing durable goods such as real estate and cars, buying insurance, e.g. health and property insurance, investing and saving for retirement.

Personal finance may also involve paying for a loan, or debt obligations. The six key areas of personal financial planning, as suggested by the Financial Planning Standards Board, are:[2]

  1. Financial position: is concerned with understanding the personal resources available by examining net worth and household cash flows. Net worth is a person's balance sheet, calculated by adding up all assets under that person's control, minus all liabilities of the household, at one point in time. Household cash flows total up all from the expected sources of income within a year, minus all expected expenses within the same year. From this analysis, the financial planner can determine to what degree and in what time the personal goals can be accomplished. Ratios are frequently used on the corporate level to measure a companies ability to cover its cost given the assets it has on hand. This can be paralleled to an individual level as well. Maintaining a ratio of 2:1 or greater is seen as healthy in this respect. [3] This means that for every dollar of expenses there is an existing dollar value of assets such as cash to cover that cost.
  2. Adequate protection: the analysis of how to protect a household from unforeseen risks. These risks can be divided into the following: liability, property, death, disability, health and long term care. Some of these risks may be self-insurable, while most will require the purchase of an insurance contract. Determining how much insurance to get, at the most cost effective terms requires knowledge of the market for personal insurance. Business owners, professionals, athletes and entertainers require specialized insurance professionals to adequately protect themselves. Since insurance also enjoys some tax benefits, utilizing insurance investment products may be a critical piece of the overall investment planning.
  3. Tax planning: typically the income tax is the single largest expense in a household. Managing taxes is not a question of if you will pay taxes, but when and how much. Government gives many incentives in the form of tax deductions and credits, which can be used to reduce the lifetime tax burden. Most modern governments use a progressive tax. Typically, as one's income grows, a higher marginal rate of tax must be paid. Understanding how to take advantage of the myriad tax breaks when planning one's personal finances can make a significant impact in which can later save you money in the long term.
  4. Investment and accumulation goals: planning how to accumulate enough money – for large purchases and life events – is what most people consider to be financial planning. Major reasons to accumulate assets include purchasing a house or car, starting a business, paying for education expenses, and saving for retirement. Achieving these goals requires projecting what they will cost, and when you need to withdraw funds that will be necessary to be able to achieve these goals. A major risk to the household in achieving their accumulation goal is the rate of price increases over time, or inflation. Using net present value calculators, the financial planner will suggest a combination of asset earmarking and regular savings to be invested in a variety of investments. In order to overcome the rate of inflation, the investment portfolio has to get a higher rate of return, which typically will subject the portfolio to a number of risks. Managing these portfolio risks is most often accomplished using asset allocation, which seeks to diversify investment risk and opportunity. This asset allocation will prescribe a percentage allocation to be invested in stocks (either preferred stock or common stock), bonds (for example mutual bonds or government bonds, or corporate bonds), cash and alternative investments. The allocation should also take into consideration the personal risk profile of every investor, since risk attitudes vary from person to person.
  5. Retirement planning is the process of understanding how much it costs to live at retirement, and coming up with a plan to distribute assets to meet any income shortfall. Methods for retirement plans include taking advantage of government allowed structures to manage tax liability including: individual (IRA) structures, or employer sponsored retirement plans, annuities and life insurance products. Often times this field of personal finance is overlooked as many individuals see this being something in their distant future. However, the sooner you start investing the greater likelihood you have for actually being prepared. Accrual compounding from the prime "work years" can create a significant impact down the road as these earlier donation years will have more time to compound on themselves giving the individual more wiggle room in their future for unexpected unforeseen events. With every additional year of missed contributions, this creates more tension on the individual to contribute a greater sum leading up to the maturity date of what they may have always thought would be their retirement age. In the same respect an individual who is able to attain a healthy amount of wealth at a young age may then be able to invest it into a mutual fund or stocks accordingly depending on how much they believe they will need to maintain their standard of living once retirement arrives. Allocating a portfolio according to your goals is crucial and also needs to be continuously adjusted as your personal needs and desires change. Often times, individuals will allocate 80% of their earnings into stocks while there is still room for error (more time away from retirement) with only 20% being distributed to mutual funds as these are considered more 'steady' streams of investment. As an individual begins to get closer to their retirement, often times they will gradually adjust these allocations to have a greater percentage in their mutual fund section to solidify their gains and only leave 20% to still generate higher returns. This allocation is commonly recommended by financial planners as it allows the individual to build capital in their work years and keep their gains safe in the long run, leaving less room for volatility. [4]
  6. Estate planning involves planning for the disposition of one's assets after death. Typically, there is a tax due to the state or federal government at one's death. Avoiding these taxes means that more of one's assets will be distributed to one's heirs. One can leave one's assets to family, friends or charitable groups.

Corporate finance

JackWelchApril2012
Jack Welch, an American business executive, author, and chemical engineer. He was chairman and CEO of General Electric between 1981 and 2001. During his tenure at GE, the company's value rose 4,000%.

Corporate finance deals with the sources of funding and the capital structure of corporations, the actions that managers take to increase the value of the firm to the shareholders, and the tools and analysis used to allocate financial resources. Although it is in principle different from managerial finance which studies the financial management of all firms, rather than corporations alone, the main concepts in the study of corporate finance are applicable to the financial problems of all kinds of firms. Corporate finance generally involves balancing risk and profitability, while attempting to maximize an entity's assets, net incoming cash flow and the value of its stock, and generically entails three primary areas of capital resource allocation. In the first, "capital budgeting", management must choose which "projects" (if any) to undertake. The discipline of capital budgeting may employ standard business valuation techniques or even extend to real options valuation; see Financial modeling. The second, "sources of capital" relates to how these investments are to be funded: investment capital can be provided through different sources, such as by shareholders, in the form of equity (privately or via an initial public offering), creditors, often in the form of bonds, and the firm's operations (cash flow). Short-term funding or working capital is mostly provided by banks extending a line of credit. The balance between these elements forms the company's capital structure. The third, "the dividend policy", requires management to determine whether any unappropriated profit (excess cash) is to be retained for future investment / operational requirements, or instead to be distributed to shareholders, and if so, in what form. Short term financial management is often termed "working capital management", and relates to cash-, inventory- and debtors management.

Corporate finance also includes within its scope business valuation, stock investing, or investment management. An investment is an acquisition of an asset in the hope that it will maintain or increase its value over time that will in hope give back a higher rate of return when it comes to disbursing dividends. In investment management – in choosing a portfolio – one has to use financial analysis to determine what, how much and when to invest. To do this, a company must:

  • Identify relevant objectives and constraints: institution or individual goals, time horizon, risk aversion and tax considerations;
  • Identify the appropriate strategy: active versus passive hedging strategy
  • Measure the portfolio performance
James Simons 2007
James Harris Simons American mathematician, hedge fund manager, and philanthropist. He is known as a quantitative investor and in 1982 founded Renaissance Technologies, a private hedge fund based in East Setauket, NY.

Financial management overlaps with the financial function of the accounting profession. However, financial accounting is the reporting of historical financial information, while financial management is concerned with the allocation of capital resources to increase a firm's value to the shareholders and increase their rate of return on the investments.

Financial risk management, an element of corporate finance, is the practice of creating and protecting economic value in a firm by using financial instruments to manage exposure to risk, particularly credit risk and market risk. (Other risk types include foreign exchange, shape, volatility, sector, liquidity, inflation risks, etc.) It focuses on when and how to hedge using financial instruments; in this sense it overlaps with financial engineering. Similar to general risk management, financial risk management requires identifying its sources, measuring it (see: Risk measure#Examples), and formulating plans to address these, and can be qualitative and quantitative. In the banking sector worldwide, the Basel Accords are generally adopted by internationally active banks for tracking, reporting and exposing operational, credit and market risks.[5]

Financial services

An entity whose income exceeds its expenditure can lend or invest the excess income to help that excess income produce more income in the future. Though on the other hand, an entity whose income is less than its expenditure can raise capital by borrowing or selling equity claims, decreasing its expenses, or increasing its income. The lender can find a borrower—a financial intermediary such as a bank—or buy notes or bonds (corporate bonds, government bonds, or mutual bonds) in the bond market. The lender receives interest, the borrower pays a higher interest than the lender receives, and the financial intermediary earns the difference for arranging the loan.

A bank aggregates the activities of many borrowers and lenders. A bank accepts deposits from lenders, on which it pays interest. The bank then lends these deposits to borrowers. Banks allow borrowers and lenders, of different sizes, to coordinate their activity.

Finance is used by individuals (personal finance), by governments (public finance), by businesses (corporate finance) and by a wide variety of other organizations such as schools and non-profit organizations. In general, the goals of each of the above activities are achieved through the use of appropriate financial instruments and methodologies, with consideration to their institutional setting.

Finance is one of the most important aspects of business management and includes analysis related to the use and acquisition of funds for the enterprise.

In corporate finance, a company's capital structure is the total mix of financing methods it uses to raise funds. One method is debt financing, which includes bank loans and bond sales. Another method is equity financing – the sale of stock by a company to investors, the original shareholders (they own a portion of the business) of a share. Ownership of a share gives the shareholder certain contractual rights and powers, which typically include the right to receive declared dividends and to vote the proxy on important matters (e.g., board elections). The owners of both bonds (either government bonds or corporate bonds) and stock (whether its preferred stock or common stock), may be institutional investors – financial institutions such as investment banks and pension funds  or private individuals, called private investors or retail investors.

Public finance

Public finance describes finance as related to sovereign states and sub-national entities (states/provinces, counties, municipalities, etc.) and related public entities (e.g. school districts) or agencies. It usually encompasses a long-term strategic perspective regarding investment decisions that affect public entities.[6] These long-term strategic periods usually encompass five or more years.[7] Public finance is primarily concerned with:

  • Identification of required expenditure of a public sector entity
  • Source(s) of that entity's revenue
  • The budgeting process
  • Debt issuance (municipal bonds) for public works projects

Central banks, such as the Federal Reserve System banks in the United States and Bank of England in the United Kingdom, are strong players in public finance, acting as lenders of last resort as well as strong influences on monetary and credit conditions in the economy.[8]

Capital

Capital, in the financial sense, is the money that gives the business the power to buy goods to be used in the production of other goods or the offering of a service. (Capital has two types of sources, equity and debt).

The deployment of capital is decided by the budget. This may include the objective of business, targets set, and results in financial terms, e.g., the target set for sale, resulting cost, growth, required investment to achieve the planned sales, and financing source for the investment.

A budget may be long term or short term. Long term budgets have a time horizon of 5–10 years giving a vision to the company; short term is an annual budget which is drawn to control and operate in that particular year.

Budgets will include proposed fixed asset requirements and how these expenditures will be financed. Capital budgets are often adjusted annually (done every year) and should be part of a longer-term Capital Improvements Plan.

A cash budget is also required. The working capital requirements of a business are monitored at all times to ensure that there are sufficient funds available to meet short-term expenses.

The cash budget is basically a detailed plan that shows all expected sources and uses of cash when it comes to spending it appropriately. The cash budget has the following six main sections:

  1. Beginning cash balance – contains the last period's closing cash balance, in other words, the remaining cash of the last year.
  2. Cash collections – includes all expected cash receipts (all sources of cash for the period considered, mainly sales)
  3. Cash disbursements – lists all planned cash outflows for the period such as dividend, excluding interest payments on short-term loans, which appear in the financing section. All expenses that do not affect cash flow are excluded from this list (e.g. depreciation, amortization, etc.)
  4. Cash excess or deficiency – a function of the cash needs and cash available. Cash needs are determined by the total cash disbursements plus the minimum cash balance required by company policy. If total cash available is less than cash needs, a deficiency exists.
  5. Financing – discloses the planned borrowings and repayments of those planned borrowings, including interest.

Financial theory

Financial economics

Financial economics is the branch of economics studying the interrelation of financial variables, such as prices, interest rates and shares, as opposed to goods and services. Financial economics concentrates on influences of real economic variables on financial ones, in contrast to pure finance. It centres on managing risk in the context of the financial markets, and the resultant economic and financial models.

It essentially explores how rational investors would apply risk and return to the problem of an investment policy. Here, the twin assumptions of rationality and market efficiency lead to modern portfolio theory (the CAPM), and to the Black–Scholes theory for option valuation; it further studies phenomena and models where these assumptions do not hold, or are extended.

"Financial economics", at least formally, also considers investment under "certainty" (Fisher separation theorem, "theory of investment value", Modigliani–Miller theorem) and hence also contributes to corporate finance theory.

Financial econometrics is the branch of financial economics that uses econometric techniques to parameterize the relationships suggested.

Although they are closely related, the disciplines of economics and finance are distinct. The "economy" is a social institution that organizes a society's production, distribution, and consumption of goods and services, all of which must be financed.

Financial mathematics

Financial mathematics is a field of applied mathematics, concerned with financial markets. The subject has a close relationship with the discipline of financial economics, which is concerned with much of the underlying theory that is involved in financial mathematics. Generally, mathematical finance will derive, and extend, the mathematical or numerical models suggested by financial economics. In terms of practice, mathematical finance also overlaps heavily with the field of computational finance (also known as financial engineering). Arguably, these are largely synonymous, although the latter focuses on application, while the former focuses on modelling and derivation (see: Quantitative analyst). The field is largely focused on the modelling of derivatives, although other important subfields include insurance mathematics and quantitative portfolio problems. See Outline of finance: Mathematical tools; Outline of finance: Derivatives pricing.

Experimental finance

Experimental finance aims to establish different market settings and environments to observe experimentally and provide a lens through which science can analyze agents' behavior and the resulting characteristics of trading flows, information diffusion and aggregation, price setting mechanisms, and returns processes. Researchers in experimental finance can study to what extent existing financial economics theory makes valid predictions and therefore prove them, and attempt to discover new principles on which such theory can be extended and be applied to future financial decisions. Research may proceed by conducting trading simulations or by establishing and studying the behavior, and the way that these people act or react, of people in artificial competitive market-like settings.

Behavioral finance

Behavioral finance studies how the psychology of investors or managers affects financial decisions and markets when making a decision that can impact either negatively or positively on one of their areas. Behavioral finance has grown over the last few decades to become central and very important to finance.[9]

Behavioral finance includes such topics as:

  1. Empirical studies that demonstrate significant deviations from classical theories.
  2. Models of how psychology affects and impacts trading and prices
  3. Forecasting based on these methods.
  4. Studies of experimental asset markets and use of models to forecast experiments.

A strand of behavioral finance has been dubbed quantitative behavioral finance, which uses mathematical and statistical methodology to understand behavioral biases in conjunction with valuation. Some of these endeavors has been led by Gunduz Caginalp (Professor of Mathematics and Editor of Journal of Behavioral Finance during 2001–2004) and collaborators including Vernon Smith (2002 Nobel Laureate in Economics), David Porter, Don Balenovich, Vladimira Ilieva, Ahmet Duran). Studies by Jeff Madura, Ray Sturm and others have demonstrated significant behavioral effects in stocks and exchange traded funds. Among other topics, quantitative behavioral finance studies behavioral effects together with the non-classical assumption of the finiteness of assets.

Professional qualifications

There are several related professional qualifications, that can lead to the field:

Unsolved problems in finance

As the debate to whether finance is an art or a science is still open,[10] there have been recent efforts to organize a list of unsolved problems in finance.

See also

References

  1. ^ Staff, Investopedia (2003-11-20). "Finance". Investopedia. Retrieved 2018-11-26.
  2. ^ "Financial Planning Curriculum Framework". Financial Planning Standards Board. 2011. Archived from the original on 1 February 2012. Retrieved 7 April 2012.
  3. ^ https://www.investopedia.com/university/ratios/liquidity-measurement/ratio1.asp
  4. ^ https://www.thestreet.com/investing/bonds-vs-stocks-14656707
  5. ^ "The Basel Committee's response to the financial crisis: report to the G20". www.bis.org. 2010-10-19. Retrieved 2018-04-09.
  6. ^ Doss, Daniel; Sumrall, William; Jones, Don (2012). Strategic Finance for Criminal Justice Organizations (1st ed.). Boca Raton, Florida: CRC Press. p. 23. ISBN 978-1439892237.
  7. ^ Doss, Daniel; Sumrall, William; Jones, Don (2012). Strategic Finance for Criminal Justice Organizations (1st ed.). Boca Raton, Florida: CRC Press. pp. 53–54. ISBN 978-1439892237.
  8. ^ Board of Governors of Federal Reserve System of the United States. Mission of the Federal Reserve System. Federalreserve.gov Accessed: 2010-01-16. (Archived by WebCite at Archived 2010-01-16 at WebCite)
  9. ^ Shefrin, Hersh (2002). Beyond greed and fear: Understanding behavioral finance and the psychology of investing. New York: Oxford University Press. p. ix. ISBN 978-0195304213. Retrieved 8 May 2017.
  10. ^ "Is finance an art or a science?". Investopedia. Retrieved 2015-11-11.

External links

Asset

In financial accounting, an asset is any resource owned by the business. Anything tangible or intangible that can be owned or controlled to produce value and that is held by a company to produce positive economic value is an asset. Simply stated, assets represent value of ownership that can be converted into cash (although cash itself is also considered an asset).

The balance sheet of a firm records the monetary value of the assets owned by that firm. It covers money and other valuables belonging to an individual or to a business.One can classify assets into two major asset classes: tangible assets and intangible assets. Tangible assets contain various subclasses, including current assets and fixed assets. Current assets include inventory, while fixed assets include such items as buildings and equipment.

Intangible assets are nonphysical resources and rights that have a value to the firm because they give the firm some kind of advantage in the marketplace. Examples of intangible assets include goodwill, copyrights, trademarks, patents and computer programs, and financial assets, including such items as accounts receivable, bonds and stocks.

Bachelor of Science

A Bachelor of Science (Latin Baccalaureus Scientiae, B.S., BS, B.Sc., BSc, or B.Sc; or, less commonly, S.B., SB, or Sc.B., from the equivalent Latin Scientiae Baccalaureus) is an undergraduate academic degree awarded for completed courses that generally last three to five years, or a person holding such a degree.The first university to admit a student to the degree of Bachelor of Science was the University of London in 1860. Prior to this, science subjects were included in the BA bracket, notably in the cases of mathematics, physics, physiology and botany.Whether a student of a particular subject is awarded a Bachelor of Science degree or a Bachelor of Arts degree can vary between universities. For example, an economics degree may be given as a Bachelor of Arts (BA) by one university but as a BS by another, and some universities offer the choice of either. Some liberal arts colleges in the United States offer only the BA, even in the natural sciences, while some universities offer only the BS, even in non-science fields.At universities that offer both BA and BS degrees in the same discipline, the BS degree is usually more extensive in that particular discipline and is targeted toward students who are pursuing graduate school or a profession in that field.

Bond (finance)

In finance, a bond is an instrument of indebtedness of the bond issuer to the holders. The most common types of bonds include municipal bonds and corporate bonds.

The bond is a debt security, under which the issuer owes the holders a debt and (depending on the terms of the bond) is obliged to pay them interest (the coupon) or to repay the principal at a later date, termed the maturity date. Interest is usually payable at fixed intervals (semiannual, annual, sometimes monthly). Very often the bond is negotiable, that is, the ownership of the instrument can be transferred in the secondary market. This means that once the transfer agents at the bank medallion stamp the bond, it is highly liquid on the secondary market.Thus a bond is a form of loan or IOU: the holder of the bond is the lender (creditor), the issuer of the bond is the borrower (debtor), and the coupon is the interest. Bonds provide the borrower with external funds to finance long-term investments, or, in the case of government bonds, to finance current expenditure. Certificates of deposit (CDs) or short-term commercial paper are considered to be money market instruments and not bonds: the main difference is the length of the term of the instrument.

Bonds and stocks are both securities, but the major difference between the two is that (capital) stockholders have an equity stake in a company (that is, they are owners), whereas bondholders have a creditor stake in the company (that is, they are lenders). Being a creditor, bondholders have priority over stockholders. This means they will be repaid in advance of stockholders, but will rank behind secured creditors, in the event of bankruptcy.

Another difference is that bonds usually have a defined term, or maturity, after which the bond is redeemed, whereas stocks typically remain outstanding indefinitely. An exception is an irredeemable bond, such as a consol, which is a perpetuity, that is, a bond with no maturity.

Chief financial officer

The chief financial officer (CFO) is the officer of a company that has primary responsibility for managing the company's finances, including financial planning, management of financial risks, record-keeping, and financial reporting. In some sectors, the CFO is also responsible for analysis of data. Some CFOs have the title CFOO for chief financial and operating officer. In the United Kingdom, the typical term for a CFO is finance director (FD). The CFO typically reports to the chief executive officer (CEO) and the board of directors and may additionally have a seat on the board.

The CFO supervises the finance unit and is the chief financial spokesperson for the organization. The CFO directly assists the chief operating officer (COO) on all strategic and tactical matters relating to budget management, cost–benefit analysis, forecasting needs, and securing of new funding.

Corporate finance

Corporate finance is an area of finance that deals with sources of funding, the capital structure of corporations, the actions that managers take to increase the value of the firm to the shareholders, and the tools and analysis used to allocate financial resources. The primary goal of corporate finance is to maximize or increase shareholder value. Although it is in principle different from managerial finance which studies the financial management of all firms, rather than corporations alone, the main concepts in the study of corporate finance are applicable to the financial problems of all kinds of firms.

Correspondingly, corporate finance comprises two main sub-disciplines.Capital budgeting is concerned with the setting of criteria about which value-adding projects should receive investment funding, and whether to finance that investment with equity or debt capital. Working capital management is the management of the company's monetary funds that deal with the short-term operating balance of current assets and current liabilities; the focus here is on managing cash, inventories, and short-term borrowing and lending (such as the terms on credit extended to customers).

The terms corporate finance and corporate financier are also associated with investment banking. The typical role of an investment bank is to evaluate the company's financial needs and raise the appropriate type of capital that best fits those needs. Thus, the terms "corporate finance" and "corporate financier" may be associated with transactions in which capital is raised in order to create, develop, grow or acquire businesses. Recent legal and regulatory developments in the U.S. will likely alter the makeup of the group of arrangers and financiers willing to arrange and provide financing for certain highly leveraged transactions.Financial management overlaps with the financial function of the accounting profession. However, financial accounting is the reporting of historical financial information, while financial management is concerned with the allocation of capital resources to increase a firm's value to the shareholders.

Equity (finance)

In accounting, equity (or owner's equity) is the difference between the value of the assets and the value of the liabilities of something owned. It is governed by the following equation:

For example, if someone owns a car worth $15,000 (an asset), but owes $5,000 on a loan against that car (a liability), the car represents $10,000 of equity. Equity can be negative if liabilities exceed assets. Shareholders' equity (or stockholders' equity, shareholders' funds, shareholders' capital or similar terms) represents the equity of a company as divided among shareholders of common or preferred stock. Negative shareholders' equity is often referred to as a shareholders' deficit.

Alternatively, equity can also refer to a corporation's share capital (capital stock in American English). The value of the share capital depends on the corporation's future economic prospects. For a company in liquidation proceedings, the equity is that which remains after all liabilities have been paid.

Finance Commission

The First Finance Commission (IAST: Vitta Āyoga) was established by the President of India in 1951 under Article 280 of the Indian Constitution. It was formed to define the financial relations between the central government of India and the individual state governments. The Finance Commission (Miscellaneous Provisions) Act, 1951 additionally defines the terms of qualification, appointment and disqualification, the term, eligibility and powers of the Finance Commission. As per the Constitution, the Commission is appointed every five years and consists of a chairman and four other members.

Since the institution of the First Finance Commission, stark changes in the macroeconomic situation of the Indian economy have led to major changes in the Finance Commission's recommendations over the years.

There have been fifteen commissions to date. The most recent was constituted in 2017 and is chaired by N. K.Singh, a former member of the Planning Commission.

Financial services

Financial services are the economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, accountancy companies, consumer-finance companies, stock brokerages, investment funds, individual managers and some government-sponsored enterprises. Financial services companies are present in all economically developed geographic locations and tend to cluster in local, national, regional and international financial centers such as London, New York City, and Tokyo.

G20

The G20 (or Group of Twenty) is an international forum for the governments and central bank governors from 19 countries and the European Union. Founded in 1999 with the aim to discuss policy pertaining to the promotion of international financial stability, the G20 has expanded its agenda since 2008 and heads of government or heads of state, as well as finance ministers and foreign ministers, have periodically conferred at summits ever since. It seeks to address issues that go beyond the responsibilities of any one organization.Membership of the G20 consists of 19 individual countries plus the European Union (EU). The EU is represented by the European Commission and by the European Central Bank. Collectively, the G20 economies account for around 90% of the gross world product (GWP), 80% of world trade (or, if excluding EU intra-trade, 75%), two-thirds of the world population, and approximately half of the world land area.

With the G20 growing in stature after its inaugural leaders' summit in 2008, its leaders announced on 25 September 2009 that the group would replace the G8 as the main economic council of wealthy nations. Since its inception, the G20's membership policies have been criticized by numerous intellectuals, and its summits have been a focus for major protests by left-wing groups and anarchists.The heads of the G20 nations met semi-annually at G20 summits between 2009 and 2010. Since the November 2011 Cannes summit, all G20 summits have been held annually.

HDFC Bank

HDFC Bank Limited (Housing Development Finance Corporation) is an Indian banking and financial services company headquartered in Mumbai, Maharashtra. It has 88,253 permanent employees as of 31 March 2018 and has a presence in Bahrain, Hong Kong and Dubai. HDFC Bank is India’s largest private sector lender by assets. It is the largest bank in India by market capitalization as of February 2016. It was ranked 69th in 2016 BrandZ Top 100 Most Valuable Global Brands.

Holding company

A holding company is a company that owns other companies' outstanding stock. A holding company usually does not produce goods or services itself; rather, its purpose is to own shares of other companies to form a corporate group. Holding companies allow the reduction of risk for the owners and can allow the ownership and control of a number of different companies.

In the United States, 80% of stock, in voting and value, must be owned before tax consolidation benefits such as tax-free dividends can be claimed. That is, if Company A owns 80% or more of the stock of Company B, Company A will not pay taxes on dividends paid by Company B to its stockholders, as the payment of dividends from B to A is essentially transferring cash from one company to the other. Any other shareholders of Company B will pay the usual taxes on dividends, as they are legitimate and ordinary dividends to these shareholders.

Sometimes a company intended to be a pure holding company identifies itself as such by adding "Holding" or "Holdings" to its name.

Islamic banking and finance

Islamic banking or Islamic finance (Arabic: مصرفية إسلامية‎) or sharia-compliant finance is banking or financing activity that complies with sharia (Islamic law) and its practical application through the development of Islamic economics. Some of the modes of Islamic banking/finance include Mudarabah (profit-sharing and loss-bearing), Wadiah (safekeeping), Musharaka (joint venture), Murabahah (cost-plus), and Ijara (leasing).

Sharia prohibits riba, or usury, defined as interest paid on all loans of money (although some Muslims dispute whether there is a consensus that interest is equivalent to riba). Investment in businesses that provide goods or services considered contrary to Islamic principles (e.g. pork or alcohol) is also haraam ("sinful and prohibited").

These prohibitions have been applied historically in varying degrees in Muslim countries/communities to prevent un-Islamic practices. In the late 20th century, as part of the revival of Islamic identity, a number of Islamic banks formed to apply these principles to private or semi-private commercial institutions within the Muslim community. Their number and size has grown, so that by 2009, there were over 300 banks and 250 mutual funds around the world complying with Islamic principles, and around $2 trillion was sharia-compliant by 2014. Sharia-compliant financial institutions represented approximately 1% of total world assets, concentrated in the Gulf Cooperation Council (GCC) countries, Iran, and Malaysia. Although Islamic banking still makes up only a fraction of the banking assets of Muslims, since its inception it has been growing faster than banking assets as a whole, and is projected to continue to do so.The industry has been lauded for returning to the path of "divine guidance" in rejecting the "political and economic dominance" of the West, and noted as the "most visible mark" of Islamic revivalism, its most enthusiastic advocates promise "no inflation, no unemployment, no exploitation and no poverty" once it is fully implemented. However, it has also been criticized for failing to develop profit and loss sharing or more ethical modes of investment promised by early promoters, and instead selling banking products that "comply with the formal requirements of Islamic law", but use "ruses and subterfuges to conceal interest", and entail "higher costs, bigger risks" than conventional (ribawi) banks.

List of tallest buildings

This list of tallest buildings includes skyscrapers with continuously occupiable floors and a height of at least 350 m. Non-building structures, such as towers, are not included in this list (see list of tallest buildings and structures).

Manmohan Singh

Manmohan Singh (Punjabi: [mənˈmoːɦən ˈsɪ́ŋɡ] (listen); born 26 September 1932) is an Indian economist and politician who served as the Prime Minister of India from 2004 to 2014. The first Sikh in office, Singh was also the first prime minister since Jawaharlal Nehru to be re-elected after completing a full five-year term.

Born in Gah (now in Punjab, Pakistan), Singh's family migrated to India during its partition in 1947. After obtaining his doctorate in economics from Oxford, Singh worked for the United Nations during 1966–69. He subsequently began his bureaucratic career when Lalit Narayan Mishra hired him as an advisor in the Ministry of Commerce and Industry. Over the 70s and 80s, Singh held several key posts in the Government of India, such as Chief Economic Advisor (1972–76), governor of the Reserve Bank (1982–85) and head of the Planning Commission (1985–87).

In 1991, as India faced a severe economic crisis, newly elected Prime Minister P. V. Narasimha Rao surprisingly inducted the apolitical Singh into his cabinet as Finance Minister. Over the next few years, despite strong opposition, he as a Finance Minister carried out several structural reforms that liberalised India's economy. Although these measures proved successful in averting the crisis, and enhanced Singh's reputation globally as a leading reform-minded economist, the incumbent Congress party fared poorly in the 1996 general election. Subsequently, Singh served as Leader of the Opposition in the Rajya Sabha (the upper house of Parliament of India) during the Atal Bihari Vajpayee government of 1998–2004.

In 2004, when the Congress-led United Progressive Alliance (UPA) came to power, its chairperson Sonia Gandhi unexpectedly relinquished the premiership to Manmohan Singh. Singh's first ministry executed several key legislations and projects, including the Rural Health Mission, Unique Identification Authority, Rural Employment Guarantee scheme and Right to Information Act. In 2008, opposition to a historic civil nuclear agreement with the United States nearly caused Singh's government to fall after Left Front parties withdrew their support. Although India's economy grew rapidly under UPA I, its security was threatened by several terrorist incidents (including the 2008 Mumbai attacks) and the continuing Maoist insurgency.

The 2009 general election saw the UPA return with an increased mandate, with Singh retaining the office of Prime Minister. Over the next few years, Singh's second ministry government faced a number of corruption charges—over the organisation of the 2010 Commonwealth Games, the 2G spectrum allocation case and the allocation of coal blocks. After his term ended in 2014 he opted out from the race to the office of the Prime Minister of India during 2014 Indian general election. Singh was never a member of the Lok Sabha but continues to serve as a member of the Parliament of India, representing the state of Assam in the Rajya Sabha for the fifth consecutive term since 1991.

Minister of Finance (India)

The Minister of Finance (or simply, Finance Minister) is the head of the Ministry of Finance of the Government of India. One of the senior-most offices in the Union Cabinet, the finance minister is responsible for the fiscal policy of the government. As part of this, a key duty of the Finance Minister is to present the annual Union Budget in Parliament, which details the government's plan for taxation and spending in the coming financial year. Through the Budget, the finance minister also outlines the allocations to different ministries and departments. Occasionally, he is assisted by the Minister of State for Finance and the lower-ranked Deputy Minister of Finance.

Public finance

Public finance is the study of the role of the government in the economy. It is the branch of economics which assesses the government revenue and government expenditure of the public authorities and the adjustment of one or the other to achieve desirable effects and avoid undesirable ones.The purview of public finance is considered to be threefold: governmental effects on (1) efficient allocation of resources, (2) distribution of income, and (3) macroeconomic stabilization.

Real estate

Real estate is "property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more generally) buildings or housing in general. Also: the business of real estate; the profession of buying, selling, or renting land, buildings, or housing." It is a legal term used in jurisdictions whose legal system is derived from English common law, such as India, England, Wales, Northern Ireland, United States, Canada, Pakistan, Australia, and New Zealand.

Security (finance)

A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some jurisdictions the term specifically excludes financial instruments other than equities and fixed income instruments. In some jurisdictions it includes some instruments that are close to equities and fixed income, e.g., equity warrants. In some countries and languages the term "security" is commonly used in day-to-day parlance to mean any form of financial instrument, even though the underlying legal and regulatory regime may not have such a broad definition.

In the United Kingdom, the national competent authority for financial markets regulation is the Financial Conduct Authority; the definition in its Handbook of the term "security" applies only to equities, debentures, alternative debentures, government and public securities, warrants, certificates representing certain securities, units, stakeholder pension schemes, personal pension schemes, rights to or interests in investments, and anything that may be admitted to the Official List.

In the United States, a security is a tradable financial asset of any kind. Securities are broadly categorized into:

debt securities (e.g., banknotes, bonds and debentures)

equity securities (e.g., common stocks)

derivatives (e.g., forwards, futures, options, and swaps).The company or other entity issuing the security is called the issuer. A country's regulatory structure determines what qualifies as a security. For example, private investment pools may have some features of securities, but they may not be registered or regulated as such if they meet various restrictions.

Securities may be represented by a certificate or, more typically, "non-certificated", that is in electronic (dematerialized) or "book entry" only form. Certificates may be bearer, meaning they entitle the holder to rights under the security merely by holding the security, or registered, meaning they entitle the holder to rights only if he or she appears on a security register maintained by the issuer or an intermediary. They include shares of corporate stock or mutual funds, bonds issued by corporations or governmental agencies, stock options or other options, limited partnership units, and various other formal investment instruments that are negotiable and fungible.

Wharton School of the University of Pennsylvania

The Wharton School of the University of Pennsylvania ( WHAWR-tən; also known as Wharton Business School, The Wharton School or simply Wharton) is the business school of the University of Pennsylvania, a private Ivy League university in Philadelphia, Pennsylvania. Established in 1881 through a donation from Joseph Wharton, the Wharton School is the world's oldest collegiate school of business. Furthermore, Wharton is the business school that has produced the highest number of billionaires in the US.The Wharton School awards Bachelor of Science in Economics degrees at the undergraduate level and Master of Business Administration degrees at the postgraduate level, both of which require the selection of a major. Wharton also offers a doctoral program and houses, or co-sponsors, several diploma programs either alone or in conjunction with the other schools at the university.Wharton's MBA program is ranked No. 1 in the United States according to Forbes and No. 1 in the United States according to the 2020 U.S. News & World Report ranking. Meanwhile, Wharton's MBA for Executives and undergraduate programs are also ranked No. 2 and No. 1, respectively, in the United States by the same publications. According to US News, MBA graduates of Wharton earn an average $159,815 first year base pay not including bonuses, the highest at leading schools. Wharton's MBA program is tied for the highest in the United States average GMAT score of 732 (97th percentile) for its entering class. In general, Wharton has over 95,000 alumni in 153 countries, with notable figures such as Donald Trump, Jeremy Rifkin, Elon Musk, Warren Buffett, Sundar Pichai, Nassim Nicholas Taleb, Aditya Mittal, Steven A. Cohen, Jeff Weiner, Anil Ambani, John Sculley, Walter Annenberg, Leonard Lauder, Laurence Tisch, Michael Moritz, Ruth Porat, Kunal Bahl, and William Wrigley Jr. II. Its alumni include the CEOs of Google, LinkedIn, The Blackstone Group, CBS, General Electric, Boeing, Pfizer, Comcast, Oracle, DHL, UPS, Pepsi, Time, Inc, BlackRock, Johnson & Johnson, UBS AG, Wrigley Company, and Tesco.

General areas of finance

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