Want to study in Finance and build career in this discipline? Then you should know the finance and the three main areas of this subject.
Finance is the management of money and assets, which can be easily converted into cash. We cannot think a business world without finance. So finance is the art of managing various resources such as money, assets, securities, investments etc.
There are three main areas of Finance and financial managers must have knowledge of all this three areas if they are to do their jobs well. Those are:
- Money and capital market
- Investment
- Financial management.
“According to statistics of USA, the average salary of finance discipline in 2016 is $55,243.”
1. Money and capital market:
Money and capital market is the area which deals with securities market and financial market. Many finance majors go to work for financial institutions such as investment banking firms, mutual funds, banks and insurance companies. So one needs knowledge of valuation techniques in the following factors for being successful.
- The factor that causes interest rates to rise.
- The factor that causes interest rates to fall.
- The regulation to which financial institutions are subject.
- The various types of financial instruments (mortgage, auto loan, certificates of deposit and so on.
Also, one needs a general knowledge of all aspects of business administration, because the management of a financial institution involves accounting, marketing, personnel and computer system and financial management.
It is important for oneself to have the ability to communicate both orally and in writing. It is also important to have the ability to get others to do their jobs well.
2. Investment:
Investment which focuses on the decision made by both individual and institutional investors as they choose securities for their investment portfolio.
Finance graduates who go into investment often work for a brokerage house, such as Merrill Lynch, either in sales or as a security analyst. They also work in various area such as:
- for banks, mutual funds, or insurance companies in the management of their investment portfolios;
- for financial consulting firms advising individual investors or pension funds on how to invest their capital;
- for investment banks whose primary function is to help businesses raise new capital;
- Or as financial planners whose job is to help individuals develop long-term financial goals and portfolios.
There are three main functions in the investments areas.
- Sales
- Analyzing individual securities.
- Determining the optimal mix of securities for a given investor.
So, the three main functions in the Investment areas are very important to get others to do their progress.
3. Financial Management or Business Finance:
Financial management or business finance is the area which involves decisions within firms.
Financial management is the broadest of the three areas. And it is the one with the most job opportunities.
Financial management is important in all types of businesses and others side. Those are-
- Financial institutions.
- Industrial and retail firms.
- Government operations.
- From school to hospitals to highway departments.
A Financial manager have the following responsibility for deciding-
- The credit terms under which customers may buy.
- How much inventory the firm should carry.
- How much cash to keep on hand.
- Whether to acquire others firms (merger analysis)
- How much of the firms earnings to plow back into the business versus pay out as dividends.
There are financial implications in virtually all business decisions. Nonfinancial executives must know enough finance to work these implications into their own specialized analysis.
Summary
Finance major will need knowledge of all three areas if he or she wants to build career in finance.
For Example, A bank lending officer cannot do his job well without a good understanding of financial management. Because he must be able to judge how well a business is being operated.
Similarity, corporate financial managers need to know what their bankers are thinking about. They also need to know how investors judge a firms performance. Thus determine its stock price.
Therefore, if anyone want to succeed in the business arena, he or she must be highly competent in your own area, say, marketing, but one must also have a familiarity with the other business disciplines, including finance. For this, every student of business, regardless of his or her major, should be concerned with financial management.