The World Structure of Finance
Finance embodies the all encompassing science of the management of the various types of funds instruments. The broad spheres of finance are business, personal, and public finance. Finance dynamics are an interaction of saving and lending money and dealing with the components of time, currency along with risk and their complex fundamental interactions. Finance functions primarily through individuals and businesses depositing revenue in banks where after the bank lends to other individuals or concerns to be used for goods and services or invested while interest is charged on the outstanding loans.
Bonds are instruments of debt that are sold to investors from corporate entities. Investors then choose to either hold the debt while collecting the interest or sell the debt in secondary markets. Banks are the principal managers of capitalization by providing access to various credit resources.
Investment products are managed with measured care of inherent risks that the various investment products can be exposed to. These financial instruments provide numerous configurations of securitized assets that can be openly traded on securities exchanges. These include stock exchanges which list and trade equity in publicly-traded corporations along with various types of bond issues. Public finance is driven and managed by the various central banks like the US Federal Reserve System, Bank of England, Reserve Bank of Australia or the People's Bank of China.
Central banks play a key role in being emergency lenders and controlling the money supply with varied monetary and credit conditions that influence the overall economy. Central banks tend to infuse money into the target economy when economic times are difficult to stimulate business activity and improve economic conditions. At other times when a particular economy is heating up and business activity is creating a bubble or frenzy the central banks can reign in the activity with various policies that will slow down activity.
The task of attempting to moderate economic activity is difficult since economies generally react rather slowly to external forces where centarl banks actions can be immediate and far reaching.
The financial markets are represented by a variety of institutions including Wall Street, various capital markets and other trading market mediums. In simple terms you can define financial markets as financial dealings intent to assist the growth and development of various business while at the same time returning a profit to investors. More..
A stock refers to ownership of a part of a corporation made public through offering of shares, then traded to investors giving companies the means to acquire finances for further development and growth. The investors derive profit through the growth of the corporation. More..
The financial market also includes a large range of bonds for investment such as Treasury Bonds, municipal bonds and corporate bonds. Bonds provide funding for the overall global economy; while influencing the interest rates of all types of borrowed monies. More...
The commodities markets determine the prices of things that are grown or mined and are traded in futures markets where a commodity is traded with a market price based on anticipated demand and availability at a certain date in the future.