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Finance
Basic Financial Concepts
When you look at your finances, you are looking at how you manage your financial affairs, especially your income, expenses and investment decisions.
When a person has more income than expenses, the excess can be invested. However, if you have more expense than income, you will have to liquidate your assets, increase your debts or find a way to bring in more income.
Lenders loan money to borrowers in return for interest. Often, the lender is borrowing the money as well. This results in the borrower paying a higher interest rate than the lender pays. For example, you may notice that a bank will pay 4% interest on your CD, but charges 7% on a personal loan.
A bank basically is a way to connect those with extra money with those that are in need of funding. They keep money flowing in the consumer marketplace.
Finance also affects consumers through corporations. An example of corporate finance trickling down to the individual is the sale of stock. The company sells the stock to an institutional investor, such as an investment bank, who in turn sells it to the general public. The owner of the stock is given a partial ownership in the company. For example, if you buy one share of LKH and there are 100 shares in total, you are 1/100 owner in LKH. In return for selling the stock, the company receives cash that it uses to expand its business. This helps maintain the company's capital structure.
Finance is used by individual consumers, governments, business and other organizations. The goals of each are achieved through different financial instruments.
| Basics of Personal Finance |
| Basics of Business Finance |
| Basics of State Finance |
| Experimental Finance |
| Financial Economics |
| Financial Planner |
| Foreign Exchange Market |
| Risk-free interest rate |
| Yield Curve |
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