Outline of finance

The following outline provides an overview and topical guide to finance:

Finance – the field concerned with how individuals, businesses, and organizations raise, allocate, and manage monetary resources over time, while accounting for the risks associated with their activities and investments.

Overview

The term finance may incorporate any of the following:

Fundamental financial concepts

  • Finance – Academic discipline studying businesses and investments
    • Arbitrage – Capitalisation of risk-free opportunities in financial markets
    • Capital (economics) – Already-produced durable goods that are used in production of goods or services
    • Capital asset pricing model – Finance model linking expected return to systematic risk
    • Cash flow – Movement of money into or out of a business, project, or financial product
    • Cash flow matching – Strategy aligning asset cash inflows with liability outflows
    • Debt – Obligation to pay borrowed money
      • Default – Financial failure to meet legal conditions of a loan
      • Consumer debt – Amount owed by individual consumers
      • Debt consolidation – Form of debt refinancing
      • Debt settlement – Settlement negotiated with a debtor's unsecured creditor
      • Credit counseling – Process to help debtors
      • Bankruptcy – Legal status for relief from debts
      • Debt diet – Debt management plan
      • Debt-snowball method – Personal finance strategy
      • Debt of developing countries
    • Financial ethics – Application of ethical principles to the area of business activities
    • Asset types
      • Real estate – Land, including its buildings and resources
      • Securities – Tradable financial asset
      • Commodities – Fungible item produced to satisfy wants or needs
      • Futures – Standardised contract to buy or sell an asset at a future date
      • Cash – Physical currency and other immediately accessible liquid assets
    • Discounted cash flow – Method of valuing a project, company, or asset
    • Financial capital – Economic resources used to buy what is needed to make products or provide services
      • Funding – Act of providing resources
    • Entrepreneur – Person who owns and operates a business
    • Fixed income analysis – Process of valuing debt securities by assessing their risk and return
    • Gap financing – Short-term loan covering the gap between available funds and total financing needs
    • Global financial system – Global framework for capital flows
    • Hedge – Investment position used to offset potential losses in another asset
      • Basis risk – Risk that a hedge and its underlying asset do not move perfectly together
    • Interest rate – Percentage of a sum of money charged for its use
    • Short-rate model – Interest-rate model describing the stochastic evolution of the instantaneous short rate
      • Vasicek model – Mathematical model of interest rates
      • Cox–Ingersoll–Ross model – Stochastic model for the evolution of financial interest rates
      • Hull–White model – Model of future interest rates
      • Chen model – Three-factor short-rate model for interest-rate dynamics
      • Black–Derman–Toy model – Short-rate model in mathematical finance
    • Interest – Sum paid for the use of money
      • Effective interest rate – Precisely defined interest rate
      • Nominal interest rate – Interest rate without adjusting for inflation
      • Interest rate basis – Calculation method for the accrual of interest
      • Fisher equation – Estimate of future interest rates
      • Crowding out – Reduction in private investment caused by increased government borrowing
      • Annual percentage rate – Interest rate for a whole year
      • Interest coverage ratio, also known as Times interest earned – Ratio measuring a firm's ability to meet its interest payments
    • Investment – Set of actions with the intent of earning profit
      • Foreign direct investment – Cross-border investment giving a foreign investor lasting control of an enterprise
      • Gold as an investment – Use of gold as a store of value and investment asset
      • Over-investing – Investing more in an asset than its market value justifies
    • Leverage – Use of borrowed funds in the purchase of an asset
    • Long (finance) – Position in a financial instrument in which the holder owns a positive amount
    • Liquidity
      • Market liquidity – Finance property of an asset
      • Accounting liquidity – Measure of a debtor's ability to pay their debts as/when they mature
      • Funding liquidity – Ability of a financial institution to meet its payment obligations when due
    • Margin (finance) – Type of financial collateral used to cover credit risk
    • Mark to market – Accounting method valuing assets and liabilities at current market prices
    • Market impact – Concept in economics
    • Medium of exchange – Method by which value is transferred between parties
    • Microcredit – Small loans to impoverished borrowers
    • Money – Object or record accepted as payment
      • Money creation – Process by which the money supply of an economic region is increased
      • Currency – Standardization of money
      • Coin – Small, flat and usually round piece of material used as money
      • Banknote – Paper money issued by a bank
      • Counterfeit – Making a copy or imitation which is represented as the original
      • History of money
      • Monetary reform – Movements to amend the financial system
    • Portfolio – Financial term for a collection of investments
    • Reference rate – Benchmark interest rate used to price loans and financial contracts
    • Return – Finance term; profit on an investment
    • Risk – Possibility of something bad happening
      • Financial risk – Any of various types of risk associated with financing
      • Risk management – Identification, evaluation and control of risks
        • Financial risk management – Protecting economic value by managing risk exposure
        • Uncompensated risk – In investments, level of additional risk
      • Risk measure – Concept in financial mathematics
        • Coherent risk measure – Concept in financial economics
        • Deviation risk measure – Risk metric quantifying variability of returns around their expected value
        • Distortion risk measure – Risk measure derived by applying a distortion function to a loss distribution
        • Spectral risk measure – Coherent risk measure using weighted outcomes based on risk aversion
        • Value at risk – Estimated potential loss for an investment under a given set of conditions
          • Expected shortfall – Risk measure estimating the average loss in the worst tail of the distribution
          • Entropic value at risk – Coherent measure for value at risk
    • Scenario analysis – Futures studies / Futures techniques method
    • Short (finance) – Selling unowned financial securities
    • Speculation – Engaging in risky financial transactions
      • Day trading – Buying and selling financial instruments within the same trading day
    • Position trader – Standardised contract to buy or sell an asset at a future date
    • Spread trade – Type of financial purchase on securities
    • Standard of deferred payment – Debt valuation in economics
    • Store of value – Property that money is useful later
    • Time horizon, also known as planning horizon – Planned duration over which an investment or decision is expected to be held
    • Time value of money – Better to receive money now than later
      • Discounting – When a creditor delays payments from a debtor in exchange for a fee
      • Present value (PV), also known as Present Discounted Value (PDV) – Current worth of a future sum discounted to today
      • Future value – Value of an asset at a specific date
      • Net present value – Valuation in finance
      • Internal rate of return – Method of calculating an investment's rate of return
      • Modified internal rate of return – Measure of an investment's attractiveness
      • Annuity – Series of payments made at equal intervals
      • Perpetuity – Annuity with payments made at equal intervals indefinitely
    • Trade – Exchange of goods and services
      • Free trade – Absence of government restriction on international trade
      • Free market – Form of market-based economy
      • Fair trade – Sustainable and equitable trade
    • Unit of account – Standard numerical measure used to value and compare goods and services
    • Volatility – Degree of variation of a trading price series over time
    • Yield – Income return on an investment expressed as a percentage of its value
    • Yield curve – Relationships among bond yields of different maturities
    • Equated monthly installment – Loan repayment variant
    • Down payment – Upfront partial payment for the purchase of something expensive
  • Financial Technology

History

  • History of finance – Academic discipline studying businesses and investments
  • History of banking – Development of banking institutions and practices from antiquity to the present
  • History of insurance – Development of insurance practices and institutions from antiquity to the present
  • Stock market bubble – Economic bubble in a stock market
    • Tulip mania – 17th-century economic bubble in the Netherlands
    • South Sea Bubble – 18th-century economic speculation bubble
    • Mississippi Company – French joint-stock company
    • Railway Mania – Speculative frenzy in the UK in the 1840s about railways
    • Dot-com bubble – Tech stock speculative craze, c. 1995–2003
    • United States housing bubble – Economic bubble
  • Vix pervenit 1745, on usury and other dishonest profit
  • Panic of 1837 – 19th-century United States financial crisis
  • Erie War – 19th-century Wall-Street battle for control of the Erie Railroad
  • Long Depression – Worldwide economic recession from 1873 to 1879
  • Post-World War I hyperinflation; see
  • Wall Street Crash of 1929 – Major stock market crash in the United States
  • Great Depression – Worldwide economic depression (1929–1939)
  • Bretton Woods Accord – Financial-economic agreement reached in 1944
  • 1973 oil crisis – OAPEC petroleum embargo
  • 1979 energy crisis – Worldwide increase in crude oil prices following the Iranian Revolution
  • Savings and Loan Crisis – US financial crisis from 1986 to 1995
  • Black Monday – Global stock market crash
  • 1997 Asian financial crisis – Regional financial crisis that struck East and Southeast Asia in 1997–1998
  • Stock market downturn of 2002 – Downturn in international stock prices
  • 2008 financial crisis – Worldwide economic crisis
  • Great Recession – 2007–2009 international economic decline

Finance terms by field

Accounting (financial record keeping)

Main articles: Accounting and List of accounting topics
  • Auditing – Independent examination of an organization
  • Accounting software – Computer program that maintains account books
  • Book keeping – Recording financial transactions or events
  • FASB – Private US organization for accounting
  • Financial accountancy – Field of accounting
  • Management accounting – Field of business administration, part of the internal accounting system of a company
  • Philosophy of Accounting – Conceptual framework
  • Hedge accounting – Accounting method aligning hedging gains and losses with the hedged item
    • IFRS 9 – Accounting standard
    • Fair value accounting – Accounting method valuing assets and liabilities at current market prices

Banking

Corporate finance

Main article: Corporate finance
See also: Financial management
  • Balance sheet analysis – Accounting financial summary
    • Financial ratio – Numerical value to determine the financial condition of a company
  • Business plan – Formal written document containing the goals of a business
      • Investment committee – Head of investments in an organization
      • Business valuation – Determination of the economic value of a business
      • Stock valuation – Method of calculating theoretical values of companies and their stocks
      • Fundamental analysis – Analysis of a business's financial statements, health, and market
      • Real option – Capital budgeting analysis term
      • Valuation topics – Overview of finance and finance-related topics
      • Fisher separation theorem – Firm"s investment decision is independent of its owners' consumption preferences
    • Sources of financing – Mix of funds used to start and sustain a business
    • Securities – Tradable financial asset
    • Debt – Obligation to pay borrowed money
    • Initial public offering – Type of securities offering in which a private company goes public
    • Capital structure – Mix of funds used to start and sustain a business
    • Cost of capital – Cost of a company's funds
    • Dividend policy – Policies in finance
      • Dividend – Payment made by a corporation to its shareholders
      • Dividend tax – Tax levied on stock earnings
      • Dividend yield – Financial ratio of dividends to share price
      • Modigliani–Miller theorem – Economic theory about capital structure
  • Corporate action – Event initiated by a public company
  • (Strategic) Financial management
    • Capital management – Management of capital assets and investments
      • Capital budgeting – How an organization allocates its cash and resources
      • Working capital – Difference between a firm's assets and liabilities used to fund day-to-day operations
        • Current assets – Assets held for less than a fiscal year
        • Current liabilities – Liabilities of the business that are to be settled in cash
    • Managerial finance – Application of financial principles to managerial decision-making
    • Management accounting – Field of business administration, part of the internal accounting system of a company
  • Mergers and acquisitions – Processes through which companies combine or transfer ownership
    • Leveraged buyout – Acquisition of a company using a significant proportion of borrowed money
    • Takeover – Purchase of a company by another company
    • Corporate raid – Company acquisition strategy
    • Contingent value rights – Buyer's rights in corporate finance
  • Real option – Capital budgeting analysis term
    • Return on investment – Ratio between net income and investment
    • Loan covenant – Condition in a commercial loan or bond agreement
    • Cash conversion cycle – Length of time it takes a company to convert resource inputs to cash flows
    • Cash management – Measures of managing short-term cash in the company
    • Inventory optimization – Business practice for improving location and size of inventory storage
      • Supply chain management – Management of the flow of goods and services
      • Just In Time (JIT) – Methodology used to improve production
      • Economic order quantity (EOQ), also known as Optimum Batch Quantity – Production scheduling model
      • Economic production quantity (EPQ) – Model in inventory management
      • Economic batch quantity – Model for determining the optimal production batch size
    • Credit (finance) – Financial term for the trust between parties in transactions with a deferred payment
    • Credit scoring – Numerical expression representing a person's creditworthiness
    • Default risk – Risk that a borrower or counterparty fails to meet financial obligations
    • Discounts and allowances – Reductions applied to the basic sale price of goods or services
    • Factoring (trade) – Financial transaction and a type of debtor finance
    • Supply chain finance, also known as supplier finance or reverse factoring – Financing methods that optimize cash flow across buyer–supplier relationships
    • Corporate budget – Balance sheet or statement of estimated receipts and expenditures

Investment management

Main article: Investment management
See also: § Portfolio theory

Personal finance

Main article: Personal finance
  • 529 plan – United States savings program for educational expenses
  • ABLE account – U.S. savings program for individuals with disabilities
  • Asset allocation – Investment strategy
    • Asset location
  • Budget – Balance sheet or statement of estimated receipts and expenditures
  • Coverdell Education Savings Account – US tax advantaged investment account
  • Credit and debt
    • Credit card – Card for financial transactions on credit
    • Debt consolidation – Form of debt refinancing
    • Mortgage loan – Loan secured using real estate
      • Continuous-repayment mortgage – Mortgage repaid through continuous or near-continuous amortisation
  • Debit card – Card used for financial transactions
  • Direct deposit – Deposit of money by a payer into a payee's account
  • Employment contract – Kind of contract in labour law
    • Commission – Form of variable-pay remuneration for services rendered or products sold
    • Employee stock option – Option for employee to share in company stock
    • Employee or fringe benefit – Non-wage compensation provided to employees in addition to normal wages or salaries
    • Health insurance – Insurance covering health-related expenses
    • Paycheck – Record of money paid or due to employees
    • Salary – Form of periodic payment from an employer to an employee
    • Wage – Payment by an employer to an employee for labour
  • Financial literacy – Ability to make informed choices about money
  • Insurance – Protection from financial loss
  • Predatory lending – Unethical lending practices
  • Retirement plan – Retirement fund
  • Simple living – Simplified, minimalistic lifestyle
  • Social security – Means-oriented social benefit
  • Tax advantage – Financial incentive
  • Wealth – Abundance of financial assets or possessions
  • Comparison of accounting software
  • Personal financial management – Managing ones own personal finances
  • Investment club – Group of people who pool their money to make investments
  • Collective investment scheme – Way of investing money alongside other investors

Public finance

Main article: Public finance
  • Central bank – Government body that manages currency and monetary policy
  • Federal Reserve – Central banking system of the US
  • Fractional-reserve banking – Banking system where institutions hold only a fraction of deposits as reserves
    • Deposit creation multiplier – Process by which the money supply of an economic region is increased
  • Tax – Compulsory contribution to state revenue
    • Capital gains tax – Tax on investment profits
    • Estate tax – Tax paid after inheritance of property
    • inheritance tax – Tax paid after inheritance of property
    • Gift tax – Tax on money or property that one living person gives to another
    • Income tax – Tax based on taxable income
    • Inheritance tax – Tax paid after inheritance of property
    • Payroll tax – Tax imposed on employers or employees
    • Property tax – Tax on property, particularly real estate
    • land value tax – Levy on the unimproved value of land
    • Sales tax – Tax on the sales of certain goods and services
    • value added tax – Form of consumption tax
    • excise tax – Goods tax levied at the moment of manufacture rather than sale
    • use tax – Type of tax in the United States
    • Transfer tax – Tax on the transfer of property or assets between parties
    • stamp duty – Tax levied on property purchases or documents
    • Tax advantage – Financial incentive
    • Tax, tariff and trade – Compulsory contribution to state revenue
    • Tax amortization benefit – Savings resulting from amortization
  • Crowding out – Reduction in private investment caused by increased government borrowing
  • Industrial policy – Government strategy promoting industrial development
  • Agricultural policy – Laws relating to domestic agriculture and foreign-imported agricultural products
  • Currency union – Agreement involving states sharing a single currency
  • Monetary reform – Movements to amend the financial system

Risk management

Main article: Financial risk management
See also: Finance § Risk management, and Risk management § Finance
  • Asset and liability management – Framework for managing risks arising from mismatches between assets and liabilities
  • Asset–liability mismatch – Mismatch between the timing or sensitivity of a firm's assets and liabilities
  • Capital Requirements Regulation 2013 – EU banking law
  • Credit Institutions Directive 2013
  • Capital Requirements Directives – EU prudential capital and supervision rules for banks and investment firms
  • Cash flow hedge – Accounting method aligning hedging gains and losses with the hedged item
  • Cash management – Measures of managing short-term cash in the company
  • Corporate governance – Mechanisms, processes and relations by which corporations are controlled and operated
  • Climate-related asset stranding – Former physical asset, now a liability
  • Credit risk – Risk that a borrower or counterparty fails to meet financial obligations
  • Default (finance) – Financial failure to meet legal conditions of a loan
  • Discounted maximum loss – Measure of worst-case loss discounted to present value
  • Downside risk & Upside risk
  • Duration gap – Financial institutions duration gap
  • Enterprise risk management – Business methods and processes
  • Financial engineering – Application of mathematical and computational practices in finance
  • Financial risk – Any of various types of risk associated with financing
  • Financial risk management – Protecting economic value by managing risk exposure
  • Foreign exchange hedge – Method used to eliminate foreign exchange risk
  • Fuel price risk management – Strategies used to reduce financial exposure to fuel-price volatility
  • Gordon–Loeb model – Method for optimizing information security investments
  • Interest rate risk
  • Insurance – Protection from financial loss
  • Investment risk – Any of various types of risk associated with financing
  • Irrational exuberance – Unfounded market optimism that lacks fundamental valuation
  • Kelly criterion – Bet sizing formula for long-term growth
  • Liquidity risk – Type of financial risk
  • Market risk – Risks arising from movements in market variables
  • Operational risk – Risk of disrupting business operations
  • Risk accounting – Extensive subject of Management accounting
  • Risk adjusted return on capital – Profitability measurement framework
  • Risk aversion – Economics theory
  • Risk-based internal audit – Internal audit approach that prioritises areas with higher organisational risk
  • Risk measure – Concept in financial mathematics
    • Coherent risk measure – Concept in financial economics
    • Deviation risk measure – Risk metric quantifying variability of returns around their expected value
    • Distortion risk measure – Risk measure derived by applying a distortion function to a loss distribution
    • Spectral risk measure – Coherent risk measure using weighted outcomes based on risk aversion
  • Risk modeling – Modelling financial risks
  • Risk of ruin – Concept in gambling, insurance, and finance
  • Risk pool – Insurance risk management sharing liability
  • Risk register – Document used as risk management tool, acting as a repository for all identified risks
  • Risk return ratio – Mathematical ratio used in investing
  • Risk–return spectrum – Tradeoff between investment return and risk
  • Security management – Computer security procedure
  • Settlement risk – Risk that a party fails to deliver
  • Shadow banking system – Non-banks that provide services similar to banks
  • Specific risk – Risk affecting a particular asset or company, reducible through diversification
  • St. Petersburg paradox – Paradox involving a game with repeated coin flipping
  • Systematic risk – Vulnerability to significant events that affect aggregate outcomes
  • Three lines of defence – Independent, objective assurance and consulting activity
  • Treasury management – Management of an enterprise's holdings and liquidity to mitigate risk
  • Uncompensated risk – In investments, level of additional risk
  • Valuation risk – Risk that financial assets are misstated due to uncertain or unreliable valuations
  • Value at risk – Estimated potential loss for an investment under a given set of conditions
    • Computation
      • Historical simulation (finance) – Risk-measurement method that estimates losses using past market data
      • Monte Carlo – Probabilistic measurement methods
      • variance-covariance – Estimated potential loss for an investment under a given set of conditions
      • Greeks (finance) – Model parameters in mathematical finance
    • Alternate measures
      • Entropic value at risk – Coherent measure for value at risk
      • Expected shortfall, also known as Conditional value-at-risk – Risk measure estimating the average loss in the worst tail of the distribution
      • Tail value at risk (TVaR), also known as Tail Conditional Expectation – Measure giving the average loss beyond a specified Value-at-Risk level
    • Extensions
      • Profit at risk – Measure estimating the potential decline in profit under adverse market conditions
      • Margin at risk – Measure estimating potential margin shortfalls under adverse market moves
      • Liquidity at risk – Measure of potential liquidity shortfall in a financial portfolio
      • Earnings at risk (EaR), also known as Cash flow at risk – Estimate of the potential impact of market movements on a firm's earnings
      • Liquidity-adjusted VaR – Type of financial risk
  • Volatility risk – Risk arising from changes in market volatility affecting the value of financial positions
  • Volume risk – Risk that changes in transaction or production volumes will affect financial outcomes
  • Wrong way risk – Risk that exposure to a counterparty increases as their credit quality deteriorates

Constraint finance

  • Environmental finance – Field of finance focused on environmental policy
  • Feminist economics – Gender-aware branch of economics
  • Green economics – Economy based on ecological economics
  • Islamic economics – Handling of economics based on Islamic jurisprudence
  • Uneconomic growth – Economic growth that reflects or creates a decline in the quality of life
  • Value of Earth – Economical estimate of the net worth of the planet
  • Value of life – Economic measure placing a monetary value on reducing the risk of death

Insurance

Main article: Insurance
  • Actuarial science – Statistics applied to risk in insurance and other financial products
  • Annuities – Series of payments at fixed intervals
  • Catastrophe modeling – Computer-assisted risk analysis
  • Earthquake loss – Form of property insurance
  • Extended coverage – Insurance for additional risks
  • Financial risk management § Insurance
  • Insurable interest – Legal requirement that a policyholder would suffer a loss from the insured event
  • Insurable risk – Conditions under which a risk can be covered by insurance
  • Insurance – Protection from financial loss
    • Health insurance – Insurance covering health-related expenses
      • Disability insurance – Insurance providing income protection when a disability prevents a person from working
      • Accident insurance – Insurance that pays benefits for injuries or death caused by accidental events
      • Flexible spending account – Tax-advantaged financial accounts in the US
      • Health savings account – American tax-advantaged medical savings account
      • Long term care insurance – Insurance which pays monthly for nursing home or assisted-living care
      • Medical savings account – Bank holding limiting deposit use to health expenses
    • Life insurance – Insurance that pays benefits upon the policyholder's death
      • Life insurance tax shelter – Use of life insurance to defer or reduce taxes
      • Term life insurance – Life insurance providing coverage for a fixed period with no cash-value component
      • Universal life insurance – Cash value life insurance in the US
      • Variable universal life insurance – Life insurance combining flexible premiums with investment-linked cash-value accounts
      • Whole life insurance – Permanent life insurance with fixed premiums and guaranteed cash-value accumulation
    • Property insurance – Insurance that protects against most risks to property
      • Auto insurance – Insurance for road vehicles
      • Boiler insurance – Insurance covering boilers
      • Business interruption insurance – Insurance that covers lost income when normal business operations are disrupted
      • Earthquake insurance – Form of property insurance
      • Home insurance, also known as Condo insurance – Type of property insurance that covers a private residence
      • Title insurance – Form of indemnity insurance
      • Pet insurance – Insurance that reimburses veterinary costs
      • Renters' insurance – Insurance policy for a tenant's personal property and liability
    • Casualty insurance – Insurance not directly concerned with life, health, or property insurance
      • Fidelity bond – Insurance against others' frauds
      • Liability insurance – Insurance that covers legal liability for injury, damage, or loss caused to others
      • Political risk insurance – Insurance that protects investments against losses from political or sovereign actions
      • War risk insurance – Insurance that covers losses arising from war, terrorism, or other hostile acts
      • Surety bond – Promise to assume responsibility for defaulted debt
      • Terrorism insurance – Financial coverage against terrorist attacks
    • Credit insurance
      • Trade credit insurance – Insurance protecting businesses against losses from customer non-payment of trade debts
      • Payment protection insurance – Covers loan repayments if borrower cannot pay due to illness, unemployment, or death
      • Credit derivative – Financial contract that transfers the credit risk of a borrower between parties
    • Mid-term adjustment – Change to an insurance policy's terms, cover, or premium made during the policy period
    • Reinsurance – Insurance purchased by an insurance company
    • Self insurance – Bearing risk that is usually outsourced
    • Travel insurance – Insurance that covers financial losses from events during travel
    • Niche insurance – Insurance for small, low-demand areas
  • Insurance contract – Contract between the insurer and the insured
  • Loss payee clause – Clause directing insurance claim payments to a third-party interest
  • Risk Retention Group – Member-owned US liability insurance group formed under the Liability Risk Retention Act

Economics and finance

Main articles: Financial economics and Asset pricing
See also: Finance § Financial theory
  • Financial economics – Academic discipline concerned with the exchange of money
  • Financial econometrics – Method to financial market data
  • Monetary economics – Branch of economics covering theories of money
  • Mathematical economics – Branch of applied mathematics
  • Managerial economics – Application of economics in a business
  • Economic growth – Measure of increase in market value of goods
  • Decision theory – Branch of applied probability theory
  • Game theory – Mathematical models of strategic interactions
  • Experimental economics – Method used to study economic questions
  • Experimental finance – Field using controlled experiments to study financial behaviour and market dynamics
  • Behavioral economics – Factors influencing economic decisions
  • Behavioral finance – How psychological biases shape investor behaviour and financial markets

Corporate finance theory

Further information: Financial economics § Corporate finance theory, and Financial economics § Certainty
  • Fisher separation theorem – Firm"s investment decision is independent of its owners' consumption preferences
  • Modigliani–Miller theorem – Economic theory about capital structure
  • Theory of the firm – Theories relating to firms' roles in the economy
  • The Theory of Investment Value, book by John Burr Williams
  • Agency theory – Conflict of interest when one agent makes decisions on another's behalf
    • Agency costs – Costs arising from conflicts of interest between principals and their agents
    • Contract theory – Economic analysis of contracts
  • Managerial finance – Application of financial principles to managerial decision-making
  • Capital structure – Mix of funds used to start and sustain a business
    • Corporate finance § Capitalization structure
    • Capital structure substitution theory – Theory proposing that managers adjust capital structure to maximize earnings per share
    • Pecking order theory – Theory that firms prefer internal funds, then debt, and use equity last
    • Market timing hypothesis – Hypothesis that firms adjust financing decisions to exploit favourable market conditions
    • Trade-off theory of capital structure – Firms balance tax benefits of debt against financial distress costs when choosing leverage
    • Merton model – Model that values credit risk using option-based default mechanics
    • Tax shield – Reduction in taxable income achieved through allowable deductible expenses
  • Dividend policy – Policies in finance
    • Corporate finance § Dividend policy
    • Walter model – Policies in finance
    • Gordon model – Valuation model that prices a stock by discounting expected future dividends
    • Lintner model – American economist (1916–1983)
    • Residuals theory – Policies in finance
    • Signaling hypothesis – Policies in finance
    • Clientele effect – Investor shifts caused by policy changes that attract different investor groups
    • Dividend puzzle – Why firms pay dividends despite theories predicting investor indifference
    • Treasury stock § Buying back shares
    • Dividend tax – Tax levied on stock earnings
  • Capital budgeting – How an organization allocates its cash and resources
    • Corporate finance § Investment and project valuation
    • Clean surplus accounting – Valuing firms by changes in book value excluding shareholder transactions
    • Residual income valuation – Equity valuation method based on the present value of future residual income
    • Economic value added – Value of a firm's profit after deduction of capital costs
    • Market value added – Measure comparing a firm's market value with the capital invested in it
    • T-model – Connects fundamentals with investment return
    • Adjusted present value – Valuation separating financing effects
    • Uncertainty
      • Penalized present value – Method of budgeting where an investment's value is penalized according to its risk
      • Expected commercial value – Prospect-weighted valuation method for assessing uncertain project outcomes
      • Risk-adjusted net present value – Valuation in finance
      • Contingent claim valuation – Derivative whose payoff depends on an underlying asset or uncertain future event
      • Real options – Capital budgeting analysis term
      • Monte Carlo methods – Probabilistic measurement methods
  • Risk management

Asset pricing theory

Main article: Asset pricing
Further information: Financial economics § Underlying economics

Asset pricing models

  • Equilibrium pricing
    • Equities; foreign exchange and commodities
      • Capital asset pricing model – Finance model linking expected return to systematic risk
      • Consumption-based CAPM – Return on investment metrics
      • Intertemporal CAPM
      • Single-index model – Economic model
      • Multiple factor models – Asset pricing models
      • Arbitrage pricing theory – Asset pricing theory
    • Bonds; other interest rate instruments
      • Vasicek – Mathematical model of interest rates
      • Rendleman–Bartter – Short-rate model describing the evolution of interest rates
      • Cox–Ingersoll–Ross – Stochastic model for the evolution of financial interest rates
  • Risk neutral pricing
    • Equities; foreign exchange and commodities; interest rates
      • Black–Scholes – Mathematical model of financial markets
      • Black – Financial model
      • Garman–Kohlhagen – Derivative financial instrument
      • Heston – Model in finance
      • CEV – Pricing model
      • SABR – Stochastic volatility model used in derivatives markets
    • Bonds; other interest rate instruments
      • Ho–Lee – Short-rate model in financial mathematics
      • Hull–White – Model of future interest rates
      • Black–Derman–Toy – Short-rate model in mathematical finance
      • Black–Karasinski – Mathematical model of interest rate terms
      • Kalotay–Williams–Fabozzi – Interest-rate model describing the stochastic evolution of the instantaneous short rate
      • Longstaff–Schwartz – Interest-rate model describing the stochastic evolution of the instantaneous short rate
      • Chen – Three-factor short-rate model for interest-rate dynamics
      • Rendleman–Bartter – Short-rate model describing the evolution of interest rates
      • Heath–Jarrow–Morton – Model of interest rate curves
        • Cheyette – Model in mathematical finance
      • Brace–Gatarek–Musiela – Financial model of interest rates

Mathematics and finance

Time value of money

Main article: Time value of money

Financial mathematics

Main article: Financial mathematics

Mathematical tools

Derivatives pricing

Main article: Financial mathematics § Derivatives pricing
See also: Financial economics § Derivative pricing

Portfolio mathematics

Financial markets

Main article: Financial markets

Market and instruments

Equity market

Main article: Equity market

Equity valuation

Main article: Equity valuation
See also: § Context

Investment theory

Main article: Investment theory

Bond market

Main article: Bond market

Money market

Main article: Money market

Commodity market

Main article: Commodity market

Derivatives market

Main article: Derivatives market

Forward markets and contracts

Main article: Forward market

Futures markets and contracts

Main article: Futures market

Option markets and contracts

Swap markets and contracts

Derivative markets by underlyings

Equity derivatives
Main article: Equity derivative
Interest rate derivatives
Main article: Interest rate derivative
Credit derivatives
Main article: Credit derivative
Foreign exchange derivative
Main article: Foreign exchange derivative

Financial regulation

Designations and accreditation

Further information: Professional certification in financial services; Professional certification § Accountancy, auditing and finance; and § Education

Litigation

  • Liabilities Subject to Compromise

Fraud

Industry bodies

Regulatory and supervisory bodies

International

European Union

  • European Securities Committee (EU)
  • Committee of European Securities Regulators (EU)

Regulatory bodies by country

United Kingdom
United States

United States legislation

Actuarial topics

  • Actuarial topics

Valuation

This section is corporate-finance-focused: for the valuation of derivatives and interest rate instruments see § Derivatives pricing; for the economic theory see § Asset pricing theory.

Underlying theory

Context

Considerations

Discounted cash flow valuation

Main article: Valuation using discounted cash flows
Further information: Discounted cash flow and Time value of money

Relative valuation

Contingent claim valuation

Other approaches

Financial modeling

Further information: Financial modeling § Accounting
Not to be confused with Financial modeling § Quantitative finance.

Portfolio theory

General concepts

Modern portfolio theory

Main article: Modern portfolio theory
Further information: Financial economics § Uncertainty

Post-modern portfolio theory

Main article: Post-modern portfolio theory
Further information: Financial economics § Portfolio theory

Performance measurement

Mathematical techniques

Quantitative investing

Main article: Quantitative investing

Financial software tools

Further information: Business software
See also: List of free and open-source software packages § Finance

Financial modeling applications

Main article: Financial modeling

Corporate Finance

Quantitative finance

Financial institutions

Financial institutions

  • Bank – Financial institution that accepts deposits
    • List of banks
    • Advising bank
    • Central bank – Government body that manages currency and monetary policy
    • Commercial bank – Financial institution that accepts deposits and provides loans
    • Community development bank – Bank serving underserved or excluded communities
    • Cooperative bank – Type of retail or commercial bank organized cooperatively
    • Custodian bank – Financial institution providing safekeeping and securities services
    • Depository bank – Specialist bank facilitating investment via depositary receipt services
    • Ethical bank – Bank concerned with the social and environmental impacts of its investments and loans
    • Investment bank – Financial service providing capital-raising and advisory functions
    • Islamic banking – Financial activities compliant with Islamic law
    • Merchant bank – Deals in commercial loans and investment
    • Microcredit – Small loans to impoverished borrowers
    • Mutual savings bank – Depositor-owned savings institution without capital stock
    • Offshore bank – Bank located outside the country of residence of the depositor
    • Private bank – Bank owned by individuals or partners with unlimited liability
    • Savings bank – Financial institution focused on savings deposits
    • Swiss bank
    • Bank holding company – Company with significant ownership of one or more banks
  • Building society – Member-owned financial institution focused on savings and mortgages
  • Broker – Person who arranges transactions between a buyer and a seller for a commission
    • Broker-dealer – One who engages in the business of trading securities on behalf of their customers
    • Brokerage firm – Person who arranges transactions between a buyer and a seller for a commission
    • Commodity broker – Agent facilitating trades in commodity markets
    • Insurance broker – Intermediary between buyers and sellers of insurance
    • Prime brokerage – Package of services offered by investment banks
    • Retail brokerage – Person who arranges transactions between a buyer and a seller for a commission
    • Stockbroker – Professional who buys and sells shares for others
  • Clearing house – Financial institution that provides clearing and settlement services
  • Commercial lender – Lending of money
  • Community development financial institution – Financial institution in the US and UK
  • Credit rating agency – Company that assigns credit ratings
  • Credit union – Member-owned financial cooperative
  • Diversified financial
  • Export Credit Agencies – Intermediary between governments and exporters
  • Financial adviser – Professional who renders financial services to clients
  • Financial intermediary – Financial institution that connects surplus and deficit agents
  • Financial planner – Professional who prepares financial plans for people
  • Futures exchange – Financial exchange for futures contracts
    • List of futures exchanges
  • Government sponsored enterprise – Type of financial services corporation created by the United States Congress
  • Hard money lender – Short-term capital loans funded by private parties and secured by real estate
  • Independent financial adviser – Professional who offers financial advice under specific regulatory laws
  • Industrial loan company – FDIC-insured financial institutions with unique regulatory status
  • Insurance company – Protection from financial loss
  • Investment adviser – Professional who renders financial services to clients
  • Investment company – Financial institution
  • Investment trust – Collective investment fund
  • Large and Complex Financial Institutions
  • Mutual fund – Professionally managed investment fund
  • Non-banking financial company – Institution without a full banking license
  • Savings and loan association – Type of financial institution
  • Stock exchange – Organization that provides services for stock brokers and traders to trade securities
  • Trust company – Financial institution offering certain services

Education

See also

References

  1. ^ Joel G. Siegel; Jae K. Shim; Stephen Hartman (1 November 1997). Schaum's quick guide to business formulas: 201 decision-making tools for business, finance, and accounting students. McGraw-Hill Professional. ISBN 978-0-07-058031-2. Retrieved 12 November 2011. §39 "Corporate Planning Models". See also, §294 "Simulation Model".
  2. ^ See for example: Low, R.K.Y.; Faff, R.; Aas, K. (2016). "Enhancing mean–variance portfolio selection by modeling distributional asymmetries" (PDF). Journal of Economics and Business. 85: 49–72. doi:10.1016/j.jeconbus.2016.01.003.; Low, R.K.Y.; Alcock, J.; Faff, R.; Brailsford, T. (2013). "Canonical vine copulas in the context of modern portfolio management: Are they worth it?" (PDF). Journal of Banking & Finance. 37 (8): 3085–3099. doi:10.1016/j.jbankfin.2013.02.036. S2CID 154138333.
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