5 Main Areas of Finance

The four major areas of finance are personal finance, corporate finance, commercial finance, and international finance. Corporate finance mainly supports the day-to-day activities of a business. Commercial finance is all the activities related to buying and selling of securities in the stock market. International finance is the part of finance that involves travel, buying, selling, and leasing of assets all over the world. All the areas of finance have various factors affecting them.

The main article will concentrate on the main factors affecting the four areas of finance. The factors that have an impact on all the areas of finance are: interest rates, inflation, unemployment, deflation, balance of payments, international trade, and exchange rates. The interest rate is the rate at which lenders charge for loans. The inflation index measures how the price of goods and services are changing, while the unemployment index reflects the rate at which people and businesses are looking for jobs.

All the aspects of the economy need to be examined closely for sound financial planning. Finance planning involves three major activities. First, the financial analysis of the current conditions. This involves studying the inter-relations between domestic and foreign economic variables such as output, demand, taxes, prices, and foreign trade.

Second, is the area of financial mathematics or statistics. In this section, researchers investigate and test theories on risk, assurance, efficiency, inflation, and balance of payments. They develop models in financial economics and analyze the relationships between financial markets and interest rates, investment strategies, fiscal policy, and other aspects. Third, is the area of international economics and the application of international financial mathematics. This area of research studies the international dimension of economics, including micro-prudential problems, cross-rate theory, optimal interest rates, currency risks, international trading, fiscal policy, and other aspects of international finance.  Digital Waves  makes use of statistical methods to construct estimates of economic performance.

These three areas of finance describe the way people invest, make decisions about those investments, and monitor those investments. People typically borrow funds from financial institutions to purchase goods and services. Then these institutions lend funds to other people who want to purchase goods and services. Financial institutions facilitate transactions by executing transactions in the markets. Finally, individuals and companies to engage in trade by trading in securities and commodities.

The three areas of finance have a close relationship. They form the basis of the process of globalization. Globalization refers to the gradual tendency for international trade to increase, resulting in an increase in the rate of exchange of foreign currencies. This has opened up new opportunities not only for the individuals but also for financial institutions, which allow them to serve customers from different countries. For example, foreign direct investment (FDI) increases at a faster rate in countries with lower interest rates and increases at a slower rate in countries with higher interest rates.

Areas of finance can be broadly divided into two. There are  Digital Waves  secured and unsecured areas of finance. With secured finance, funds are raised for specific purposes such as the purchase of fixed assets, the repayment of debt, and the expansion of business. With unsecured finance, on the other hand, funds are raised for entirely different purposes, including speculation, raising of stock portfolios, and the funding of risky activities like mergers and acquisitions.

The main article below presents additional information on areas of finance. This article assumes that you are familiar with the broad categories of finance and the methods involved in each of those categories. If you are not familiar with any of the areas of finance described above, this article can help you understand the main ideas behind each of those categories. After reading  Digital Waves , you should be familiar with at least five areas of finance to better understand the main ideas of personal finance. By learning the ways in which different types of money are raised and used, you will have a better understanding of how to manage your own personal finances.