'Finance' is the science of funds management.[Gove, P. et al. 1961. Finance.
Webster's Third New International Dictionary of the English Language Unabridged.
Springfield, Massachusetts: G. & C. Merriam Company.] The general areas of
finance are 'business finance', 'personal finance', and 'public
finance'.[finance. (2009). In Encyclopædia Britannica. Retrieved June 23,
2009, from Encyclopædia Britannica Online:
[http://www.britannica.com/EBchecked/topic/207147/finance Finance]] Finance
includes saving money and often includes lending money. The field of finance
deals with the concepts of time, money, and risk and how they are interrelated.
It also deals with how money is spent and budgeted. One aspect of finance is through individuals and business organizations, which
deposit money in a bank. The bank then lends the money out to other individuals
or corporations for consumption or investment, and charges interest on the
loans. Loans have become increasingly packaged for resale, meaning that an investor
buys the loan (debt) from a bank or directly from a corporation. Bonds are debt
instruments sold to investors for organizations such as companies, governments
or charities.[[http://www.charitytimes.com/pages/ct_news/news%20archive/Jul-
y_06_news/030706_wellcome_trust_charity_bond.htm Charitytimes.com]] The
investor can then hold the debt and collect the interest or sell the debt on a
secondary market. Banks are the main facilitators of funding through the
provision of credit, although private equity, mutual funds, hedge funds, and
other organizations have become important as they invest in various forms of
debt. Financial assets, known as investments, are financially managed with
careful attention to financial risk management to control financial risk.
Financial instruments allow many forms of securitized assets to be traded on
securities exchanges such as stock exchanges, including debt such as bonds as
well as equity in publicly traded corporations. Central banks, such as the Federal Reserve System banks in the United States and
Bank of England in the United Kingdom, are strong players in public finance,
acting as lenders of last resort as well as strong influences on monetary and
credit conditions in the economy.[Board of Governors of Federal Reserve
System of the United States. Mission of the Federal Reserve System.
[http://www.federalreserve.gov/aboutthefed/mission.htm Federalreserve.gov]
Accessed: 2010-01-16. (Archived by WebCite at
[http://www.webcitation.org/5mpS52OAl Webcitation.org])]
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