Walter's finance blog

What is Finance?

Yes indeed, I didn't define yet what we call finance.

Let's give it a free-style try: Finance is about finding, investing, securing, transfering money between people or organisations.

The companies specialized in activities of these kind are called Financial Institutions. Banks, Insurrances, Trading companies, ... are all Financial Insitutions.

Some examples:

A set of individuals started a new business of selling oranges on the internet, they financed the first steps by themselves but want now to go global, i.e. sell world-wide. They budget estimate is that they need 1 million USD to achieve that. One way to get that money would be to borrow it from a bank but in this case it is very unlikely that they will find a bank ready to finance such a risky business and only get interest payements from it but maybe they could be interested in taking ownership of part of the company in exchange of the needed capital. We described here to financial activities: commercial banking and investment banking.

There are various others like:

• Insurance
• Pension funds
• Trading
• ...

And all our naturally completely interlinked. An Insurance invests the premiums received from the insurance contracts into stocks, bonds or other financial instruments.

Some more from wikipedia

posted by Walter @ 4:50 PM