Finance

Finance is the science of management of funds, money, assets, banking, investments and credit.

Public finance, personal finance and business finance are the main areas of finance we know today.

The financial instrument is used in saving money, lending money and deals with the principles of time, money and risk and how they are tied together. It also includes how money is spent and budgeted.

The basic concept of finance is the depositing of money in a bank by individuals or business groups and having that money lent out to other individuals or business organizations with charges of interest assessed to the loans.

Loans can be bought by an investor from a bank or from a corporation directly.

Bond debt is sold directly from corporations to investors who can hold the debt and collect the interest or it can be sold on a secondary market.

The largest funding thru credit is done by the banks, while mutual funds, hedge funds and private equity have become important investing in different forms of debt.

Securitized assets are traded on stock exchanges or other securities exchanges including bond debt and equity in publicly traded corporations through financial instruments.

The lender of last resort is central banks that control the supply of money and the interest rates that are changed in relationship to the supply of money at hand.

An individual or corporation that has an income greater then their expenses has the ability to lend or invest the extra income. While an individual or corporation that is not meeting expenses with their income can raise funding by borrowing or selling debt equity claims which will decrease their expenses or increase their income.

A lender can find someone to borrow their money such as a bank or they can buy notes or bonds in the bond market.

The financial intermediary or bank receives income from the difference in interest between the borrower and the lender with the borrower paying a higher interest rate then the the lender receives in interest.