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The 4 Main Areas of Finance
The four basic areas of finance are business finance, private finances, public finance and financial markets. These have many sub-sectors that are equally important to each other and affect how the other areas of finance operate. They also interact to influence each other and create new opportunities for financing. Here I will discuss each of these areas and what role they play in the larger picture of finance.

Business Finance The biggest three areas of finance include investment banking, merchant banking and commercial lending. All of these rely on borrowing money from banks or other financial institutions in order to lend to others. Borrowing from other financial institutions requires a credit history and the ability to obtain a loan. There are many major areas of business finance and some of the major areas include:

Security Markets Financial institutions and other investors to make large purchases of financial securities such as stocks or bonds. This involves purchasing shares in a company in exchange for payment in cash. Issuance of securities is necessary in order to raise funds for growth or to provide protection in the event of unanticipated events. Security markets provide the means by which risk capital is raised and utilized. One example of a security market is the U.S. Dollar Index where the price of the U.S. Dollar is determined by decisions made by financial institutions such as individual investors and other big-time buyers who participate in overnighturprise activities.

Financial Accounting The primary function of the accounting department is to process financial statements of all types. Some of the financial accounting categories are General Ledger, Statement of Operations, Income Statement, Financial Statement Review, Balance Sheet, and Compendia Accounting. Within the accounting profession there are many different specialties. The most common ones are management, research, policy, taxation and economic. Areas of Finance that fall under the heading of financial accounting are: Capital Budgeting, Employment and Training, Investment Research and Accounting, Personal and Employee Finance, Business Environment and Strategy, Corporate Finance, Marketing and Advertising, Regulation and Supervision.

Digital Waves within the world of finance include: bond and note, commodity and energy, financial markets, bond market, venture, international business, derivatives, financial institutions, government and business credit, bank management, and insurance. In order to perform these various tasks within a firm there must be specialized knowledge of the different areas of finance. Therefore, those in financial accounting must possess knowledge of accounts receivable, inventory, cost of goods sold, selling, purchase, sales, working capital, finance management, global economics, monetary system, risk, strategy, international business, and banking. A bachelor's degree in finance is a required undergraduate program. A master's degree may be desired or optional for professionals who may already have significant experience in one or more of the areas of finance described above or who wish to specialize.

Risk Management There are many different areas of finance that deal with managing risk. Some examples of the different areas of risk management are product and service risk, fixed income and portfolio risk, global economics and financial risk, bond and note risk, derivatives, and alternative investments. These different areas of risk management are usually further subcategorized into the areas of equity risk, distressed debt, credit risk, interest rate risk, exchange rate risk, and other financial risks. The key function of risk management is to identify, assess, minimize, or completely avoid any potentially negative effects that adverse changes in the financial markets may have on a firm.

Wealth Management This includes investing, estate, charities, and welfare. Wealth management is an important practice that seeks to secure long-term wealth and improve financial planning and management. In order to perform these tasks, individuals need to understand the different areas of finance such as savings and investment, estate and trust, foundations, personal care, real estate, vehicles and finances, and investing in the stock market. Wealth management also includes private pension plans, 401Ks, mutual funds, and insurance. Individuals interested in this area of finance typically want to be invested in stocks and bonds, mutual funds, money markets, or both.

Corporate Finance When it comes to corporate finance, individuals involved in the process need to understand the major areas of finance such as general banking, asset protection, mergers and acquisitions, and commercial real estate. This area of finance also requires comprehensive understanding of corporate laws and ethics as well as the operations of the corporation. Corporations are required by law to distribute the earnings of their operations to their shareholders. Additionally, corporations use financial decisions to benefit their owners through dividends, stock options, payroll deductions, and other options.
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