Finance As a Specialized Profession
Finance As a Specialized Profession
Financial engineering is a large field with many subtopics, each having its own unique definition and area of specialization. There are many schools which offer financial engineering courses, as well as individuals who wish to take up a career in this field. Financial engineering is also known as management science or managerial economics. Financial engineering deals with all the models and techniques of international economics and business, along with the policies and institutions that are required in order to run these systems.
The main areas that are covered under the study of financial services include public policy, banking, economics, venture capital, investment banking, asset allocation, financial markets, wealth management, insurance and pension. Public policy is applied to policies which affect the financing of the nation as a whole and the economy in particular, such as taxes and national savings. Finance is concerned with managing the financial resources of the nation as a whole as well as each individual asset and portfolio. Management science is used to understand and analyze how assets are consumed, capital is made available, working capital is managed and total financial resources.
Banking, also known as bank management, is an area of financial engineering that studies the science of banks and banking institutions. In banking, all forms of financial activities are studied such as earning of interest, market making, loan processing, security lending, investment banking and portfolio management. Public policy deals with issues that affect the economic development of the nation as a whole and the individual communities, from taxes and regulation of banking to education and health care. Venture capital is a form of capital which is acquired, either to expand current operations or to start new ventures. All of these endeavors are done in the context of public policy.
Asset allocation is all about creating a system where different assets are economically viable. This system is then followed by financial experts who create financial plans for businesses and individuals to ensure that they are putting their assets in the right places. These plans are based on projections and statistical data of future cash flows. They help to determine what type of investments will yield the highest returns while also minimizing potential losses.
Finance theory is the study of how prices and markets interact to produce the greatest overall profit. Financial theory applies to all aspects of business activities. It analyzes the relationships between economic variables such as demand, supply, incentives, credibility and reputation. The scope of the field of economics is broad and includes global, national and micro aspects. Some of the areas of study are macro economic issues such as inflation, credit risks, macroeconomic growth and financial markets. Other important areas of study are the financial services sector, banking and money management.
Accounting and economics combine to create the subject matter of accounting. Accountants prepare and maintain accounting records and produce reports for managers, investors, regulatory agencies and other interested parties. They analyze and make recommendations about any financial transactions. The work of auditors and inspectors in the financial services sector inspect and test businesses, systems and individuals to ensure they are following good financial practices. Finally, a wide range of employees in banking, insurance, investment banking and other related fields perform functions needed in the world of finance.