Financial Management: Core Concepts, Third Edition

1.2 Overview of Finance Areas

We often partition finance into four main areas:

1. Corporate finance

2. Investments

3. Financial institutions and markets

4. International finance

Corporate finance, as its name implies, is the set of financial activities that support the operations of a corporation or business, its use of money, and those decisions that affect the wealth of the owners. These activities can include borrowing funds to finance projects of the corporation such as plant expansions, launching new products, and supplementing short-term cash needs. They also include repaying these borrowed funds through dividends, interest payments, and principal payments.

Investments are generally the activities centering on the buying and selling of assets, both ...