Economics is a general activity that includes a series of specific branches, such as macroeconomics, microeconomics, public finance, economic methodology, finance, among others. One of them, finance, is the activity associated with capital flows between individuals, companies and states. In other words, the concept of finance refers to the management of money by a person or an entity. In fact, we talk about personal finance, a company or a state.
It should be taken into account that money (capital) is a good with which we buy goods and services, but that we also carry out other activities and operations. We receive or pay bank interest , carry out transactions, acquire foreign currency, pay commissions to a financial entity, among many other transactions.
The complexity of the financial world created the need to configure specific university studies, among which subjects such as corporate finance, financial mathematics, statistics, financial system, financial products or financial risk control are studied .
Terms proper to the world of finance
The financial asset is a form of savings. There are fixed – income and other variable-income financial assets .
The difference between exports and imports is known as the trade balance , so when it is related to money it is called the financial balance .
Assets are the belongings of a company and that have a monetary value within its economic balance, for example, investment funds, bills, intangible assets, among others.
A bonus is a financial obligation associated with a periodic payment related to the amortization of principal and interest.
When there is a negative balance due to a government’s revenue and expenditure difference, we call it a fiscal deficit.
A significant number of financial terms come directly from English. For example, Goowill is equivalent to mercantile credit, Hedge is hedging that avoids risk in an operation and Holding means a group of companies.
The world of finance uses a number of acronyms quite often, as there are several complex concepts that interact in financial flows, as shown by the INDET (statistical indicator), the LIBOR (bank rate) and the NYSR (corresponding to the stock exchange of New York).