When people invest funds, lend or borrow money, or buy or sell shares of a company’s stock, they are participating in the financial markets. The third area of the field of finance is financial management. Financial management studies how a business should manage its assets, liabilities, and equity to produce a good or service. Whether or not a firm offers a new product or expands production, or how to invest excess cash, are examples of decisions that financial managers are involved with.

Financial managers are constantly working with financial institutions and watching financial market trends as they make investment and financing decisions. It will be discussed on how financial concepts can help managers better manage their firms. The three areas of finance interact with, and overlap, one another. Financial institutions operate in the environment of the financial markets, and work to meet the financial needs of individuals and businesses. Financial managers do analyses and make decisions based on information they obtain from the financial markets.

They also work with financial institutions when they need to raise funds and when they have excess funds to invest. Participants investing in the financial markets use information from financial institutions and firms to evaluate different investments in securities such as stocks, bonds, and certificates of deposit. A person working in one field must be knowledgeable about all three. Thus, it is designed to provide you with a survey of all three areas of finance.