Finance An Art Or Science

About Me

Muhammad Iqbal Instructor Computer Govt. College of Commerce Vehari

Overview Who am i? I am financial manager What do i do? I manage financial affair of any type of business. Why is it Important? Those who work in financial jobs will benefit being able to interface effectively with the firm’s financial personnel, process and procedures.

Is finance an art or Science About finance? What is the purpose of finance? What are the sources of finance? What are the types of finance? Why finance is important? Conclusion

Finance Finance studies and addresses the ways in which individuals, businesses, and organizations raise, allocate, and use monetary resources over time, taking into account the risks entailed in their projects. A branch of economics concerned with resource allocation as well as resource management, acquisition and investment. Simply, finance deals with matters related to money and the markets .

Finance   

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The science of the management of money and other assets. The management of money, banking, investments and credit. Finances Monetary resources; funds, especially those of a government or corporate body. Profiling and managing project risks As a verb, "to finance" is to provide funds for business. The supplying of funds or capital .

Sources of Finance There are four different sources of finance 2. Private and Family (Funds from private and family sources) 3. Debt Financing (Borrowing money form others) 4. Equity Financing ( by sale of an interest in the business) 5. Other Financing( Other sources such as Trusts and Grants)

Purpose of Finance 

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Finance is action within an organization that leads to the best use of the resources. Financial managers make sure that the money is spent in the way to get the biggest bang for the buck. This action demands detailed, quick analysis, perceptive and determination to insure the best plans are carried out. Finance is advising people on the best investments for them to enable them to achieve lifetime goals.

Purpose of Finance 

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Finance is being entrusted with another person's money to carry out their wishes even after they die. Finance is trading securities as an agent for someone else or yourself in the anticipation of profits or limitation of risk. Finance is negotiating for resources to turn new technology and ideas into reality

Types of Finance Finance is used in three senses 1. Public Finance (Government Finance) Public Finance means collection of money through taxes or bonds and management of revenue and expenditure by the government. 2. Corporate Finance (Business Finance) Corporate finance refers to collection of money necessary to organize, reorganize or extend an enterprise through sales of shares, debentures, bounds or otherwise the success or failure of every business is linked with finance. 3. Personal Finance ( Self Finance) Involve paying for education, financing durable goods such as real estate and cars, buying insurance, e.g. health and property insurance, investing and saving for retirement.

Public Finance uses Public Finance is important because o To provide housing facilities, public buildings and other utilities o To construct roads, transit and parking facilities o To developed parks and recreational facilities o School Buildings and Facilities o To promote higher education and to provide students loan o To develop hospitals for public

Corporate Finance uses Corporate finance is necessary due to • Purchase of new asset such as machinery or equipment. • Purchase of goods and material • For the payment of business expense • For the expansion of business • For the tax and emergency payments • For the professional services and business opportunities

Personal Finance uses Personal finance is necessary due to To pay kids school fees or for the college planning For investment and life insurance To purchase auto mobiles and credit cards For the health care Real estate

Concept As we know “Finance” a field of study and an area of business, definitely has strong roots in other scientific fields Furthermore, many modern financial theories resemble scientific nomenclature. However, there is no denying the fact that the financial industry also includes non-scientific elements that liken it to an art. It has been discovered that human emotions (and decisions made because of them) play a large role in many aspects of the financial world

Is finance science? Modern financial theories, such as the Black Scholes model, draw heavily on the laws of statistics and mathematics found in science. Their very creation would have been impossible if science hadn't laid the initial groundwork.  Theoretical constructs such as the CAPM and EMH attempt to logically explain the behavior of the stock market in an emotionless, completely rational manner, wholly ignoring elements such as market sentiment and investor emotions. 

Is finance an art? History is ripe with examples that seem to contradict the idea that finance is a science. For example, stock market crashes that spurred the Great Depression are not suitably explained by scientific theories such as the EMH Also Investor sentiment appears to be mildly influenced by weather, with the overall market generally becoming more bullish when the weather is predominately sunny. Other phenomena include the January effect, which exposes the pattern of stock prices falling near the end of the calendar year and rising at the beginning of the next.

Conclusion In a financial process acquisition of funds can be categories as science and allocation of funds is an art. Further more In every field of life finance like a blood and without it all fields of life are dead body. The debate continues as to whether the field of finance is more accurately characterized as an art or a science more than likely, it's a little bit of “both

Sources  Money Banking and finance By

M. Irshad  www.answers.com/topic/finance.htm  www.wikipedia.com  www.invetopedia.com