FIN200 Introduction to Finance focuses on finance is investment management also known as asset management for the institutions and money management for the individuals. Thus, in this way finance incorporates associated activities of investment banking, securities trading, risk management, financial engineering and stock trading.
Finance is the term for study, creation and management of investments and money. It mainly deals with the questions of how the government, individual, or firm acquires the money which is termed as capital in the context of the business and how they generally invest or spend their money. Finance is mainly categorized into 3 major categories namely personal finance, corporate finance and public finance. Thus, finance can be considered as the study of the securities market incorporating the institutions and derivatives which serve as the intermediaries to such markets, therefore allowing the flow of the money via economy.
Moreover, it is observed that though finance and economics are closely connected to each other, the disciplines of economics and finance are different. The economy is the social institution that organizes the consumption, distribution, and production of product and services of the entire society, all of which needs to be financed. In the same way, although such areas generally overlap the financial function of the accounting profession, financial accounting is the reporting of past information where finance is typically forward-looking.
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Unit details of this course include the following:
Unit code- FIN200
Location: United States
Study Level: Undergraduate
Major areas of finance
The two areas of finance are discussed below in detail:
Corporate finance is a major area of finance that deals with the capital structure of the corporations, sources of finance, the analysis and tools utilized to allocate the available financial resources, and the actions that the managers take to enhance the overall value of the firm. The significance of this corporate finance is equally distributed among the following phases:
Planning finances: This is the phase where the details are made to utilize to determine the overall finances of an organization in an efficient and effective manner. Decisions are required to be made on the total amount of the finance needed, the ways in which it will be sourced and where it will be actually sourced, where it will be actually invested, would investment bring in the required level of profits, how much is anticipated profits and such to make a decision on the organization plan of action.
Raising capital: This is the most crucial stage demonstrating the significance of corporate finance and the decisions taken here would include the evaluation of the organisation's assets for sources to finance the investments. Therefore, in order to raise adequate amount of capital, the organization might take the decision to sell its shares, issue shares and debentures, ask the creditors to invest, take bank loans, and so on. Thus, it has certain crucial financial implications on the liquidity and profit being associated with the short-run funding and administering the plans of the organization to fund the long-term investments.
Investments: Investments can be either on fixed assets or working capital. Fixed capital is generally used for funding the purchase of the property, buildings, infrastructure, machinery, and technological upgrades. Nevertheless, working capital is needed for day-to-day activities such as running expenses of the organization, bills, overheads, salaries, and raw-material purchases. There is much data foresight and analytics needed before making these investments and organizations will raise the funds only when they have well-established and justified investment plans with an effective ROI (return on investment) before providing and raising capital for these investments. It is a vital phase in the procedure and associated with the excellent planning and administering assets that directly affect the overall performance and health of the organization.
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Risk management and financial monitoring: Risk management typically aims at reducing and mitigating the undertaken risks of the investment and develops part of the ongoing monitoring procedure. There are many technologies involved with the complex tool suites and the technologies being employed to give minute-by-minute assessments of its prices and its risk assessment, fluctuations, monitoring of debtor, market trends, and the creditor positions. The target is to assure higher returns for the investors.
Personal finance: Personal finance is regarded as the financial management that a person or the family unit carries out to save, budget, and spend the monetary resources over a period of time by considering several financial risks and upcoming life events. The major areas of this personal financial planning are stated below:
Financial position: It is generally concerned with understanding the available personal resources by assessing the net worth and the household cash flow. The net worth is the individual’s balance sheet which is calculated by adding up all the assets under that individual’s control minus all the liabilities of a household.
Tax planning: It is generally the income tax that is observed to be the biggest expense in the household. Administering the taxes is not the question of whether or not taxes would be paid, but how much and when. The government provides various incentives in the form of credits and tax deductions that can be utilized to minimize the lifetime tax burden. Many modern governments utilize a progressive tax.
Effective protection: This generally deals with the ways to protect the household from unforeseen risks. Such risks can be categorized into long-run care, disability, death, property, liability, and health. The certain risk might be self-insurable while many will need the purchase of the insurance contract. Determining the amount of insurance to obtain at the most cost-effective terms needs knowledge of the market for the personal insurance. The entertainers, professionals, owners, and athletes need specialized insurance professionals to effectively protect themselves. As the insurance also enjoys certain tax benefits, using the insurance investment product might be a crucial piece of the investment planning.
Weightage of this FIN200 Course Code in their Semester
The main weightage of the course unit FIN200 Introduction to Finance is 3 credits that have been set by the university.
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