What is Finance: Definition and 149 Discussions

Finance is a term for matters regarding the management, creation, and study of money and investments.
Specifically, it deals with the questions of how an individual, company or government acquires money – called capital in the context of a business – and how they spend or invest that money. Finance is then often split into the following major categories: corporate finance, personal finance and public finance.At the same time, and correspondingly, finance is about the overall "system"

i.e., the financial markets that allow the flow of money, via investments and other financial instruments, between and within these areas;
this "flow" is facilitated by the financial services sector.
Finance therefore refers to the study of the securities markets, including derivatives, and the institutions that serve as intermediaries to those markets, thus enabling the flow of money through the economy.A major focus within finance is thus investment management – called money management for individuals, and asset management for institutions – and finance then includes the associated activities of securities trading and stock broking, investment banking, financial engineering, and risk management.
Fundamental to these areas is the valuation of assets such as stocks, bonds, loans, but also, by extension, entire companies. Given its wide scope, finance is studied in several academic disciplines, and, correspondingly, there are several related professional qualifications that can lead to the field.

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  1. H

    Job Skills Jobs/career advice needed for IT/Computer science

    Hello everyone, I did my studies and finished my master's in natural sciences, only to find out that the ground is too shaky and jobs/prospects are scarce. Also, after long term unemployment, I lost a little my interest in academic work. Since I have a second degree in business administration...
  2. neilparker62

    Insights The Lambert W Function in Finance

    [url="https://www.physicsforums.com/insights/the-lambert-w-function-in-finance/"]Continue reading...
  3. WMDhamnekar

    Stochastic mathematics in application to finance

    Get your friends and family to play this simple little game that illustrates a key aspect of stochastic mathematics in application to finance. Draw on a big sheet of paper a sequence of 30 squares and label them consecutively 0 (bankrupt), 1, 1, 2, 2, 3, 3, 4, . . . , 14, 14, 15...
  4. S

    Other Why are there so many physics grads in finance?

    I was reading about the FTX CEO, and it turns out that he has a degree in physics from MIT - and evidently there are a lot of folks that have taken this same education-career path. Is physics a degree a good path from quarks to quants?
  5. adamaero

    I Algebra equation with variable as exponent

    This equation takes a present value (PV) to find mortgage payments, PMT: Alternatively, switching V for PV and T for PMT: V/T = r(1-r^n)/(1-r) What is an algebraic method to solve for "r"? Can it not be solved for? I realize I can just find out "r" by trial by error in Excel using the PMT...
  6. adamaero

    B What's the equation for an I Bond? (compounded semi-annually)

    I Bonds are compounded semi-annually. What's the equation for an I Bond? https://www.wallstreetmojo.com/series-i-bond/ Overall Rate = [Fixed interest rate + (2 x bi-annual inflation rate) + (Fixed interest rate x bi-annual inflation rate)] Say the first 6 months is 9%, the next six months is 6%...
  7. hagopbul

    Seeking Financial Benefit from Scientific Innovation: A Discussion

    Hello All : hope all are fine and well : during my scientific reading i may found a way to enhance the efficiency of some sort of simple engines , now i am working on a prototype which should be ready in few weeks for testing , the question is what next ? i am interested in solid state...
  8. M

    I Finance: does the volatility of a stock follow a certain distribution?

    Hi, I am not sure whether this is the right forum to post this. Please let me know if I should move and will do so. Overall question: Does the 'volatility' (i.e. standard deviation of the log returns) follow any sort of statistical distribution - maybe normal or log-normal? Background/...
  9. Matsukaze

    Chemistry Is the NUPOC Program a Viable Path for a BS in Chemistry?

    NUPOC program specifically. In short, I get paid a salary to earn my bachelor's before being shipped off. From what I can tell, it's the single most efficient program in terms of time spent and money gained. I would like to get advice from people who understand my career pathway. I feel that a...
  10. A

    Mathematics Behind Global Currency as a Wealth Inequality Regulation System

    I've no political agenda. This is strictly a math question about optimization. Those addressing it should do so strictly from a mathematical perspective. Thank you! If the world simply had one global currency, like Bitcoin, and everyone had an account, then the sum total of all accounts...
  11. Application of Quantum Theory to Cognition, Decision Making and Finances - Andrei Khrennikov

    Application of Quantum Theory to Cognition, Decision Making and Finances - Andrei Khrennikov

    Source: http://emqm17.org/presentations/
  12. Y

    A Quantum finance equation explanation please

    Dear all, Dr. Raymond S. T. Lee in his book on Quantum Finance (page 112), normalizes quantum price return QPR(n) using the following scaling: Normalized QPR(n)=1+0.21*sigma*QPR(n). I don't know of any way of explaining this equation. sigma is the standard deviation of the wave function...
  13. R

    Admissions I'm an Accounting / Finance Student, Can I get my Ph.D. in Physics?

    I'm going to graduate in May 2020 with an Accounting / Finance degree. Without trying to sound prideful, I am an extremely bright student and have a 3.80 GPA with very very minimal effort. However, after doing a few internships, I'm realizing more and more than I definitely do not want to be in...
  14. L

    Programs BS in physics with a minor in finance

    Hi! My daughter is currently in Grade 12. We are having a hard time to choose between BS in Physics minor in Finance and Bs in Physics with specialization in material science. Can you give us advice which is a better one? thank you in advance
  15. L

    How to finance Markethero/Clickfunnels?

    Hi, My question is how do I manage to finance a clickfunnels and a markethero subscription. I don't have that much saved right now. Clickfunnels is $300/Month and Markethero is $19/Month. I currently can only get a minimum wage job right now. Most jobs in my region either require a college...
  16. M

    MHB Tracking Monthly Finance Charges for Overdue Invoices: A Spreadsheet Solution?

    Need to set up a spread sheet that shows interest month by month on overdue payments from several unpaid (or underpaid) invoices. I have 13 such invoices, their unpaid amounts, aging in days, and the interest rate. Spread sheet to start from earliest invoice up until 06/14/2019. Thanks!
  17. P

    Finance loan interest rate homework

    I got 6.33% but apparently it's 3.2%
  18. J

    MHB Finding costs prior to finance charges: ow much did each computer cost before finance charges?

    Jim bought a desktop computer and a laptop computer. Before finance charges, the laptop cost \$150 more than the desktop. He paid for the computers using two different financing plans. For the desktop the interest rate was 7% per year, and for the laptop it was 5.5% per year. The total finance...
  19. E

    I Definition of a diffusion coefficient

    Consider this Ito proces: $$dX_t = \mu(X_t,t)dt+\sigma(X_t,t)dW_t$$ with W_t being a wiener process. My question: What is the diffusion coefficient of X? My motivation for asking: A lot if financial literature refer to "diffusion coefficient" and I haven't understood by googling it, because...
  20. rude man

    Insights A Simplified Synthesis of Financial Options Pricing - Comments

    Greg Bernhardt submitted a new PF Insights post A Simplified Synthesis of Financial Options Pricing Continue reading the Original PF Insights Post.
  21. Vital

    Geometric mean application in finance ratio question

    Homework Statement Hello. There is a financial metric called time weighted rate of return, which is computed using the following formula: 1) if we compute daily returns, or other returns within a year: r tw = (1+r1) x (1+r2) x...x (1+r nth year), where r tw is the time weighted rate of return...
  22. B

    Engineering Physics vs Engineering/Finance

    Physics is one of the hardest discipline to master. Yet physics graduates, on average, have a tougher time finding jobs and very often earn less than finance/engineering graduates. Why do you guys do this to yourself? Are you masochists? Do you enjoy pain? On a serious note: Seriously, why?
  23. Grands

    How important is the work done by people who work in finance?

    Hi guys. Due to the reason that I do not have a great knowledge related to finance, I wanted to ask if someone can simply explain me how important is for the society, the work of the people that work in the finance. How their job is useful for the people? Thanks Grands.
  24. P

    Physics Finance Job Market for Astronomy Ph.D.?

    I am currently applying to Astronomy, Astrophysics, and Physics Ph.D. programs. I am doing a Ph.D. because I can't wait to learn more about cosmology and to computationally model galaxies, but I understand that jobs as professors are rare. Looking at backup plans, I've heard that some academic...
  25. qspeechc

    Other Elementary Finance: Loans, Credit Cards & More

    Hello everyone. I'm looking for a book that covers very basic finance stuff, e.g. loans, credit cards, annuities, etc., something on basic accounting like balance sheet would be nice too. Cheers
  26. M

    Adjusted present value, finance, economics

    Did not find any "place" for this question, but hopefully someone will be able to give me some help with this. corporate tax: Tc= 25% return on debt: rD=4% return on assets = rA= 10% Debt as amount of total value: D/V = 0.6 Equity as amount of total value = E/V = 0.4 A perptual cashflow before...
  27. Shakattack12

    Calculation for Finance and Loans

    Homework Statement We are asked to calculate the comparison rate of an offset loan. Loan amount = $735000 Offset amount = $100000 Original term length = 300 months Offset term length = 254 months Original repayments = $4228.50 Adjusted Repayments (for comparison rate) = $4224.57 Total amount =...
  28. I

    How Much Will Mike Save by Age 60 With a Growing Salary and Fixed Savings Rate?

    Homework Statement Mike Polanski is 30 years of age and his salary next year will be $40000. Mike forecasts that his salary will increase at a steady rate of 5% per annum until his retirement at age 60. If Mike saves 5% of his salary each year and invests these savings at an interest rate of...
  29. I

    Derivation for number of periods finance formula

    Homework Statement Hi, I am reading this book called, Introduction to Corporate Finance, by Berk, Demarzo, Harford (second edition). In it they try to explain how to calculate the number of periods in a loan payment formula. Authors give the following equation. $$ 0 =PV + PMT \times...
  30. T

    Physics I'm a 3rd year student, should I consider a career in finance?

    I'm studying a 4 year physics degree, in the first 2 years my plan was to do a phd after but things have changed, I've done some research and I'm now thinking of changing my career path to finance, is it too late? has anyone had this experience before? I'd like to know stories of how people...
  31. A

    Other Switching from Finance to Mathematics

    I am a 24 Year Old Chartered Accountant (Indian). I used a peculiar direct entry scheme for the qualification, which essentially means I do not have an undergraduate degree. The last time I learned any sort of intensive math was in 12th Grade (Commerce + Math). However, I am interested in...
  32. M

    Is financial engineering my answer to solving complex financial problems?

    Hi guys, Am I totally lost if I am searching for help in financial engineering here- I have been struggling with a question for way too long now. Thanks,
  33. T

    Basic finance Present Value and Anuity

    I've done the problems, but they don't make sense to me. The answers don't really make sense. I'll post the question, the given formulas and my attempts: Given formulas: (1) future value to present value: PV= FV / (1+i)n (2) annual payment to present value: PV = A/i * [1 - 1/(1+i)n]...
  34. J

    I Finance - Find Monthly Payments (two methods)

    Hi. I am looking into buying a home. I am trying to calculate the monthly "Principal + Interest." My bank actually provides a neat calculator that removes all of the guesswork (https://www.schoolsfirstfcu.org/wps/portal/Calculator?calculatorParamKey=MortgageCompare). However, for the fun of...
  35. EnumaElish

    Can there be insurance for data loss due to EMP

    If an insurer were to offer a policy against data loss from a catastrophic event such as an electromagnetic pulse, the insurer would be in no position to pay when the contingency occurs, the reason being that all of his own bank account will have been wiped clean by the same EMP. Therefore I...
  36. J

    Job Skills Study materials for Investment Portfolio Manager position?

    I recently got my B.S. in Physics and began applying to various entry-level analytical jobs. An investment management firm is going to give me a 3 hour test online. The subjects are as follows: Brokerage Firm Case Study Excel Data Proofing Logic I feel comfortable self studying vlook ups and...
  37. E

    I Volatility of investment (/w currency hedging)

    I´ve been trying to compute a volatility of invesment with currency hedging and I have a question. Let's take this example. We have our money in a fond copying the S&P500 index, which has 16% volatility, we also know that the current volatility of a dollar toward our currency is 5%. We want to...
  38. F

    What is the best possible way to get into quant as EE

    Hello everyone. I searched this forum but couldn't get a good answer! In my country there are few jobs available as quant but one of the companys that hires them went to my university 5 months ago in a carrer fair. They were looking for a engineer graduate to apply and train as quant. I...
  39. D

    Which major do you think would be the best for me?

    I've had this notebook of things I've wanted to create and sell since I was a really young girl, but I don't know how to make them. Therefore, I thought I could go into engineering, because a) I want to learn how to make them, and b) I'm really interested in the concept of engineering and seeing...
  40. D

    Switching from physics to finance

    Hey everyone. I'm currently doing my Master in Theoretical Physics, because I like to study physics, but I don't want to have a career in physics. Right now I'm looking at a career in (quantitative) finance. I don't have any knowledge of it yet. Does anyone have any tips on making this switch...
  41. A

    Which B.S. degree is more employable: finance or statistics?

    Which B.S degree is more employable : finance or statistics (Business emphasis)?
  42. O

    Physics Vs Engineering for different careers?

    I've studied at an engineering course (1st year) for the last year at a decent UK university but due to some family matters, I'm having to move to another university closer to home( and starting from 1st year again). This is one of the London unis which is very highly ranked for electrical...
  43. D

    Formula from finance: decomposition, overnight index swap

    Homework Statement Hello! Please, take a look at the picture attached. I would be grateful for the step by step explanation of the math equation; how it has been derived from f/s (1 + libor eur) - (1 + libor dol) to the one with logs? Homework EquationsThe Attempt at a Solution Thank you very...
  44. D

    Engineering What can I do with a Physics BS besides engineering/CS....?

    I am a rising sophomore pursuing a physics BS with 3.75 GPA at a top 30 private university. After working in a lab as a undergrad research assistant, I realized that studying physics and doing physics is a completely different experience. While I love the subject matter, I can't imagine myself...
  45. Clish89

    BS in Finance -> Masters in Physics. Hi, I please

    Hey everyone - I have a BS in Finance and have been working in Private Equity for a couple years now. This past year I have been having the 25 year old, "wtf do I want to do with my life" quarter-life crisis. I have been highly interested in Physics my entire life. Always fascinated by the...
  46. F

    Engineering Finance BS regret - 2nd degree in ME Engineering?

    Thank god I found this website! Bear with me, its a bit of a long explanation before the question.. So let me start by saying that I'm a finance major, senior year, excellent GPA, but tremendously unmotivated for prospective business/finance industry. I love sciences, I love maths and I've...
  47. Gadgett

    How to change careers with finance problems?

    I have to admit i am inspired by the number of people posting about changing careers but my question is how does one change careers when the first one has destroyed them financially? In short I would like to pursue something like this but the idea is impossible. My credit is destroyed, I took...
  48. AlanKirby

    Physics Experimental physicist and investment banking?

    Hi, I'm looking to do an experimental physics PhD (currently on an experimental Masters program), and I was wondering what my chances of getting into investment banking (quant) are. I am aware that theoretical physicists are primed for such a position, but what about an experimentalist? I can't...
  49. C

    Physics Programming, Finance what else can a Physicist do?

    I'm currently a database programmer, which is ok but repetative. What it lacks (in my experience at least) is the spirit that my degree had. I miss thinking analytically, doing integrals, using my brain to make things from scratch rather than memorising the motions of something already invented...
  50. D

    Switching from Finance to Physics

    Hello guys, new poster here. Brief background: I am currently 25, with a B.S. in Business (Finance, Int'l Business, minor Econ), planning to re-enroll in a second bachelor’s degree in Physics & Math at my alma mater (big state school, top 40 physics) this fall. Originally went to school for...