Outline of finance
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The following outline is provided as an overview of and topical guide to finance:
Finance – addresses the ways in which individuals and organizations raise and allocate monetary resources over time, taking into account the risks entailed in their projects.
The term finance may incorporate any of the following:
- The study of money and other assets
- The management and control of those assets
- Profiling and managing related risks
Fundamental financial concepts
- Finance
- Arbitrage
- Capital (economics)
- Capital asset pricing model
- Cash flow
- Cash flow matching
- Debt
- Asset types
- Discounted cash flow
- Financial capital
- Entrepreneur
- Fixed income analysis
- Gap financing
- Global financial system
- Hedge
- Interest rate
- Short-rate model
- Interest
- Investment
- Leverage
- Long (finance)
- Liquidity
- Margin (finance)
- Mark to market
- Market impact
- Medium of exchange
- Microcredit
- Money
- Portfolio
- Reference rate
- Return
- Risk
- Scenario analysis
- Short (finance)
- Speculation
- Position trader
- Spread trade
- Standard of deferred payment
- Store of value
- Time horizon
- Time value of money
- Trade
- Unit of account
- Volatility
- Yield
- Yield curve
- Equated monthly installment
- Down payment big rupees
- History of finance
- History of banking
- History of insurance
- Tulip mania (Dutch Republic), 1620s/1630s
- South Sea Bubble (UK) & Mississippi Company (France), 1710s; see also Stock market bubble
- Vix pervenit 1745, on usury and other dishonest profit
- Panic of 1837 (US)
- Railway Mania (UK), 1840s
- Erie War (US), 1860s
- Long Depression, 1873–1896 (mainly US and Europe, though other parts of the world were affected)
- Post-World War I hyperinflation; see Hyperinflation and Inflation in the Weimar Republic
- Wall Street Crash of 1929
- Great Depression 1930s
- Bretton Woods Accord 1944
- 1973 oil crisis
- 1979 energy crisis
- Savings and Loan Crisis 1980s
- Black Monday 1987
- Asian financial crisis 1990s
- Dot-com bubble 1995-2001
- Stock market downturn of 2002
- United States housing bubble
- Financial crisis of 2007–08, followed by the Great Recession
Finance terms by field
Accounting (financial record keeping)
- Auditing
- Accounting software
- Book keeping
- FASB
- Financial accountancy
- Management accounting
- Philosophy of Accounting
- Hedge accounting
- See articles listed under: Bank § See also
- Balance sheet analysis
- Business plan
- Corporate action
- (Strategic) Financial management
- Mergers and acquisitions
- Real options
Investment management
See also: § Portfolio theory
- Active management
- Efficient market hypothesis
- Portfolio
- Modern portfolio theory
- Arbitrage pricing theory
- Passive management
- Activist shareholder
- Mutual fund
- Financial engineering
- Hedge fund
- Hedge
- #Quantitative investing, below
- 529 plan (US college savings)
- ABLE account (US plan for benefit of individuals with disabilities)
- Asset allocation
- Budget
- Coverdell Education Savings Account (Coverdell ESAs, formerly known as Education IRAs)
- Credit and debt
- Debit card
- Direct deposit
- Employment contract
- Financial literacy
- Insurance
- Predatory lending
- Retirement plan
- Australia – Superannuation in Australia
- Canada
- Japan – Nippon individual savings account
- New Zealand – KiwiSaver
- United Kingdom
- United States
- Pension
- Simple living
- Social security
- Tax advantage
- Wealth
- Comparison of accounting software
- Personal financial management
- Investment club
- Collective investment scheme
- Central bank
- Federal Reserve
- Fractional-reserve banking
- Tax
- Capital gains tax
- Estate tax (and inheritance tax)
- Gift tax
- Income tax
- Inheritance tax
- Payroll tax
- Property tax (including land value tax)
- Sales tax (including value added tax, excise tax, and use tax)
- Transfer tax (including stamp duty)
- Tax advantage
- Tax, tariff and trade
- Tax amortization benefit
- Crowding out
- Industrial policy
- Agricultural policy
- Currency union
- Monetary reform
- Asset and liability management
- Asset liability mismatch
- Capital Requirements Regulation 2013 & Credit Institutions Directive 2013 (Capital Requirements Directives)
- Cash flow hedge
- Cash management
- Corporate governance
- Climate-related asset stranding
- Credit risk
- Default (finance)
- Downside risk & Upside risk
- Duration gap
- Enterprise risk management
- Financial engineering
- Financial risk
- Financial risk management
- Foreign exchange hedge
- Fuel price risk management
- Gordon–Loeb model for cyber security investments
- Interest rate risk
- Insurance
- Investment risk
- Irrational exuberance
- Kelly criterion
- Liquidity risk
- Market risk
- Operational risk
- Risk accounting
- Risk adjusted return on capital
- Risk aversion
- Risk-based internal audit
- Risk measure
- Risk modeling
- Risk of ruin
- Risk pool
- Risk register
- Risk return ratio
- Risk–return spectrum
- Security management
- Settlement risk
- Shadow banking system
- Specific risk
- St. Petersburg paradox
- Systematic risk
- Three lines of defence
- Treasury management
- Uncompensated risk
- Valuation risk
- Value at risk
- Volatility risk
- Volume risk
- Wrong way risk
- Actuarial science
- Annuities
- Catastrophe modeling
- Earthquake loss
- Extended coverage
- Insurable interest
- Insurable risk
- Insurance
- Insurance contract
- Loss payee clause
- Risk Retention Group
Economics and finance
- Financial economics
- Financial econometrics
- Monetary economics
- Mathematical economics
- Managerial economics
- Economic growth theory
- Decision theory
- Game theory
- Experimental economics / Experimental finance
- Behavioral economics / Behavioral finance
Corporate finance theory
- Fisher separation theorem
- Modigliani–Miller theorem
- Theory of the firm
- The Theory of Investment Value
- Agency theory
- Managerial finance
- Capital structure
- Dividend policy
- Capital budgeting (valuation)
- Risk management
Asset pricing theory
- Value (economics)
- Financial markets
- General equilibrium theory
- Equilibrium price
- Arbitrage-free price
- Utility
- Economic efficiency
- State prices
- Fundamental theorem of asset pricing
- Martingale pricing
- Quantum finance
Asset pricing models
- Equilibrium pricing
- Equities; foreign exchange and commodities
- Bonds; other interest rate instruments
- Risk neutral pricing
- Equities; foreign exchange and commodities; interest rates
- Bonds; other interest rate instruments
Mathematics and finance
Financial mathematics
- Probability
- Stochastic calculus
- Monte Carlo methods
- Partial differential equations
- Volatility
- Underlying logic (see also #Economics and finance above)
- Forward contract
- Futures
- Options (incl. Real options and ESOs)
- Valuation of options
- Black–Scholes formula
- Approximations for American options
- Black model
- Binomial options model
- Finite difference methods for option pricing
- Garman–Kohlhagen model
- The Greeks
- Lattice model (finance)
- Margrabe's formula
- Monte Carlo methods for option pricing
- Monte Carlo methods in finance
- Quasi-Monte Carlo methods in finance
- Least Square Monte Carlo for American options
- Trinomial tree
- Volatility
- Swaps
- Interest rate derivatives (bond options, swaptions, caps and floors, and others)
- Black model
- Short-rate models (generally applied via lattice based- and specialized simulation-models, although "Black like" formulae exist in some cases.)
- Forward rate / Forward curve -based models (Application as per short-rate models)
- LIBOR market model (also called: Brace–Gatarek–Musiela Model, BGM)
- Heath–Jarrow–Morton Model (HJM)
- Cheyette model
- Valuation adjustments
- Yield curve modelling
Portfolio mathematics
Financial markets
Market and instruments
- Capital markets
- Securities
- Financial markets
- Primary market
- Initial public offering
- Aftermarket
- Free market
- Bull market
- Bear market
- Bear market rally
- Market maker
- Dow Jones Industrial Average
- Nasdaq
- List of stock exchanges
- List of stock market indices
- List of corporations by market capitalization
- Value Line Composite Index
- Stock market
- Stock
- Common stock
- Preferred stock
- Treasury stock
- Equity investment
- Index investing
- Private Equity
- Financial reports and statements
- Fundamental analysis
- Dividend
- Dividend yield
- Stock split
See also: § Context
- Dow theory
- Elliott wave principle
- Economic value added
- Fibonacci retracement
- Gordon model
- Growth stock
- Mergers and acquisitions
- Leveraged buyout
- Takeover
- Corporate raid
- PE ratio
- Market capitalization
- Income per share
- Stock valuation
- Technical analysis
- Chart patterns
- V-trend
- Paper valuation
- Behavioral finance
- Dead cat bounce
- Efficient market hypothesis
- Market microstructure
- Stock market crash
- Stock market bubble
- January effect
- Mark Twain effect
- Quantitative behavioral finance
- Quantitative analysis (finance)
- Statistical arbitrage
- Bond (finance)
- Zero-coupon bond
- Junk bonds
- Convertible bond
- Accrual bond
- Municipal bond
- Sovereign bond
- Bond valuation
- Fixed income
- Repurchase agreement
- International Money Market
- Currency
- Exchange rate
- International currency codes
- Table of historical exchange rates
- Commodity
- Asset
- Commodity Futures Trading Commission
- Commodity trade
- Drawdowns
- Forfaiting
- Fundamental analysis
- Futures contract
- Fungibility
- Gold as an investment
- Hedging
- Jesse Lauriston Livermore
- List of traded commodities
- Ownership equity
- Position trader
- Risk (Futures)
- Seasonal traders
- Seasonal spread trading
- Slippage
- Speculation
- Spread trade
- Technical analysis
- Trade
- Trend
- Derivative (finance)
- (see also Financial mathematics topics; Derivatives pricing)
- Underlying instrument
Forward markets and contracts
Futures markets and contracts
- Backwardation
- Contango
- Futures contract
- Financial future
- Futures exchange
Option markets and contracts
- Options
- Stock option
- Warrants
- Foreign exchange option
- Interest rate options
- Bond options
- Real options
- Options on futures
Swap markets and contracts
Derivative markets by underlyings
- Contract for difference (CFD)
- Exchange-traded fund (ETF)
- Equity options
- Equity swap
- Real estate investment trust (REIT)
- Warrants
Interest rate derivatives
- LIBOR
- Forward rate agreement
- Interest rate swap
- Interest rate cap
- Exotic interest rate option
- Bond option
- Interest rate future
- Money market instruments
- Range accrual Swaps/Notes/Bonds
- In-arrears Swap
- Constant maturity swap (CMS) or Constant Treasury Swap (CTS) derivatives (swaps, caps, floors)
- Interest rate Swaption
- Bermudan swaptions
- Cross currency swaptions
- Power Reverse Dual Currency note (PRDC or Turbo)
- Target redemption note (TARN)
- CMS steepener
- Snowball
- Inverse floater
- Strips of Collateralized mortgage obligation
- Interest only (IO)
- Principal only (PO)
- Ratchet caps and floors
- Credit default swap
- Collateralized debt obligation
- Credit default option
- Total return swap
- Securitization
Foreign exchange derivative
Financial regulation
Designations and accreditation
- Certified Financial Planner
- Chartered Financial Analyst
- Chartered Alternative Investment Analyst
- Professional risk manager
- Chartered Financial Consultant
- Canadian Securities Institute
- Independent financial adviser
- Financial risk manager
- Chartered Market Technician
- Certified Financial Technician
- Bank for International Settlements
- International Organization of Securities Commissions
- Security Commission
- Basel Committee on Banking Supervision
- Basel Accords – Basel I, Basel II, Basel III
- International Association of Insurance Supervisors
- International Accounting Standards Board
Regulatory bodies by country
- Commodity Futures Trading Commission
- Federal Reserve
- Federal Trade Commission
- Municipal Securities Rulemaking Board
- Office of the Comptroller of the Currency
- Securities and Exchange Commission
United States legislation
This section is corporate-finance-focused: for the valuation of derivatives and interest rate / fixed income instruments see § Derivatives pricing; for the economic theory see § Asset pricing theory.
- Value (economics)
- Valuation (finance) and specifically § Valuation overview
- "The Theory of Investment Value"
- Financial economics § Corporate finance theory
- Valuation risk
- Real versus nominal value (economics)
- Real prices and ideal prices
- Fair value
- Intrinsic value
- Market price
- Value in use
- Fairness opinion
- Asset pricing (see also #Asset pricing theory above)
- (Corporate) Bonds
- Equity valuation
- Real estate valuation
- Bonds
- Equity
Discounted cash flow valuation
- Bond valuation
- Modeling
- Results
- Cash flows
- Real estate valuation
- Equity valuation
- Results
- Specific models and approaches
- Cash flows
- Bonds
- Real estate
- Equity
Contingent claim valuation
- Valuation techniques
- Applications
- Corporate investments and projects
- Real options
- Corporate finance § Valuing flexibility
- Contingent value rights
- Business valuation § Option pricing approaches
- structured finance investments (funding dependent)
- special purpose entities (funding dependent)
- Balance sheet assets and liabilities
- warrants and other convertible securities
- securities with embedded options such as callable bonds
- employee stock options
- Corporate investments and projects
- "Fundamentals"-based (relying on accounting information)
- Cash flow
- Required return (i.e. discount rate)
- Terminal value
- Forecasted financial statements
- Portfolio (finance)
- Portfolio manager
- Investment management
- Investor profile
- Rate of return on a portfolio / Investment performance
- Risk return ratio
- Risk factor (finance)
- Portfolio optimization
- Diversification (finance)
- Asset classes
- Asset allocation
- Sector rotation
- Correlation & covariance
- Risk-free interest rate
- Leverage (finance)
- Utility function
- Intertemporal portfolio choice
- Portfolio insurance
- Mathematical finance § Risk and portfolio management: the P world
- Quantitative investment / Quantitative fund (see below)
- Uncompensated risk
Modern portfolio theory
- Portfolio optimization
- Theory and results (derivation of the CAPM)
- Equilibrium price
- Market price
- Systematic risk
- Idiosyncratic risk / Specific risk
- Mean-variance analysis (Two-moment decision model)
- Efficient frontier (Mean variance efficiency)
- Feasible set
- Mutual fund separation theorem
- Tangent portfolio
- Market portfolio
- Beta (finance)
- Capital allocation line
- Capital market line
- Security characteristic line
- Capital asset pricing model
- Security market line
- Roll's critique
- Related measures
- Optimization models
- Equilibrium pricing models (CAPM and extensions)
Post-modern portfolio theory
- Approaches
- Optimization considerations
- Pareto efficiency
- Bayesian efficiency
- Multiple-criteria decision analysis
- Multi-objective optimization
- Stochastic dominance
- Downside risk
- Volatility skewness
- Semivariance
- Expected shortfall (ES; also called conditional value at risk (CVaR), average value at risk (AVaR), expected tail loss (ETL))
- Tail value at risk
- Statistical dispersion
- Discounted maximum loss
- Indifference price
- Measures
- Optimization models
Performance measurement
- Alpha (finance)
- Beta (finance)
- Performance attribution
- Fixed-income attribution
- Benchmark
- Lipper average
- Returns-based style analysis
- Rate of return on a portfolio
- Holding period return
- Tracking error
- Style drift
- Simple Dietz method
- Modified Dietz method
- Modigliani risk-adjusted performance
- Upside potential ratio
- Maximum Downside Exposure
- Maximum drawdown
- Sharpe ratio
- Treynor ratio
- Jensen's alpha
- Bias ratio
- V2 ratio
- Calmar ratio (hedge fund specific)
Mathematical techniques
- Modern portfolio theory § Mathematical model
- Quadratic programming
- Nonlinear programming
- Mixed integer programming
- Stochastic programming (§ Multistage portfolio optimization)
- Copula (probability theory) (§ Quantitative finance)
- Principal component analysis (§ Quantitative finance)
- Deterministic global optimization
- Extended Mathematical Programming (§ EMP for stochastic programming)
- Genetic algorithm (List of genetic algorithm applications § Finance and Economics)
- Artificial intelligence:
Quantitative investing
- Quantitative investing
- Quantitative fund
- Quantitative analysis (finance) § Quantitative investment management
- Quantitative analysis (finance) § Algorithmic trading quantitative analyst
- Applications of artificial intelligence § Trading and investment
- Trading:
- Portfolio optimization:
- Risks:
- Discussion:
- Automated trading system § Market disruption and manipulation
- High-frequency trading § Risks and controversy
- Algorithmic trading § Issues and developments
- Positive feedback § Systemic risk
- 2010 flash crash
- Black Monday (1987) § Causes
- Statistical arbitrage § StatArb and systemic risk: events of summer 2007
- Leading companies (see Quantitative fund § List of notable quantitative funds):
Financial modeling applications
- Business valuation / stock valuation - especially via discounted cash flow, but including other valuation approaches
- Scenario planning and management decision making ("what is"; "what if"; "what has to be done"[1])
- Capital budgeting, including cost of capital (i.e. WACC) calculations
- Financial statement analysis / ratio analysis (including of operating- and finance leases, and R&D)
- Revenue related: forecasting, analysis
- Project finance modeling
- Cash flow forecasting
- Credit decisioning: Credit analysis, Consumer credit risk; impairment- and provision-modeling
- Working capital- and treasury management; asset and liability management
- Management accounting: Activity-based costing, Profitability analysis, Cost analysis, Whole-life cost
Quantitative finance
- Option pricing and calculation of their "Greeks"
- Other derivatives, especially interest rate derivatives, credit derivatives and exotic derivatives
- Modeling the term structure of interest rates (bootstrapping / multi-curves, short-rate models, HJM framework) and credit spreads
- Credit valuation adjustment, CVA, as well as the various XVA
- Credit risk, counterparty credit risk, and regulatory capital: EAD, PD, LGD, PFE
- Structured product design and manufacture
- Portfolio optimization[2] and Quantitative investing more generally; see further re optimization methods employed.
- Financial risk modeling: value at risk (parametric- and / or historical, CVaR, EVT), stress testing, "sensitivities" analysis
Financial institutions
- Bank
- Building society
- Broker
- Clearing house
- Commercial lender
- Community development financial institution
- Credit rating agency
- Credit union
- Diversified financial
- Edge Act Corporation
- Export Credit Agencies
- Financial adviser
- Financial intermediary
- Financial planner
- Futures exchange
- Government sponsored enterprise
- Hard money lender
- Independent financial adviser
- Industrial loan company
- Insurance company
- Investment adviser
- Investment company
- Investment trust
- Large and Complex Financial Institutions
- Mutual fund
- Non-banking financial company
- Savings and loan association
- Stock exchange
- Trust company
- For the typical finance career path and corresponding education requirements see:
- Financial analyst generally, and esp. § Qualification, discussing various investment, banking, and corporate roles (i.e. financial management, corporate finance, investment banking, securities analysis & valuation, portfolio & investment management, credit analysis, working capital & treasury management; see Financial modeling § Accounting)
- Quantitative analyst, Quantitative analysis (finance) § Education and Financial engineering § Education, specifically re roles in quantitative finance (i.e. derivative pricing & hedging, interest rate modeling, financial risk management, financial engineering, computational finance; also, the mathematically intensive variant on the banking roles; see Financial modeling § Quantitative finance)
- Business education lists undergraduate degrees in business, commerce, accounting and economics; "finance" may be taken as a major in most of these, whereas "quantitative finance" is almost invariably postgraduate, following a math-focused Bachelors; the most common degrees for (entry level) investment, banking, and corporate roles are:
- Bachelor of Business Administration (BBA)
- Bachelor of Commerce (BCom)
- Bachelor of Accountancy (B.Acc)
- Bachelor of Economics (B.Econ)
- Bachelor of Finance - the undergraduate version of the MSF below
- The tagged BS / BA "in Finance", or less common, "in Investment Management" or "in Personal Finance"
- At the postgraduate level, the MBA, MCom and MSM (and recently the Master of Applied Economics) similarly offer training in finance generally; at this level there are also the following specifically focused master's degrees, with MSF the broadest - see Master of Finance § Comparison with other qualifications for their focus and inter-relation:
- Master of Applied Finance (M.App.Fin)
- Master of Commerce in Finance (MCom)
- Master of Computational Finance
- Master's in Corporate Finance
- Master of Finance (M.Fin, MIF)
- Master's in Financial Analysis
- Master of Financial Economics
- Master of Financial Engineering (MFE)
- Master of Financial Planning
- Master's in Financial Management
- Master of Financial Mathematics
- Master's in Financial Risk Management
- Master's in Investment Management
- Master of Mathematical Finance
- Master of Quantitative Finance (MQF)
- Master of Science in Finance (MSF, MSc Finance)
- MS in Fintech
- Doctoral-training in finance is usually a requirement for academia, but not relevant to industry
- quants often enter the profession with PhDs in disciplines such as physics, mathematics, engineering, and computer science, and learn finance "on the job”
- as an academic field, finance theory is studied and developed within the disciplines of management, (financial) economics, accountancy, and applied / financial mathematics.
- For specialized roles, there are various Professional Certifications in financial services (see #Designations and accreditation above); the best recognized are arguably:
- Association of Corporate Treasurers (MCT / FCT)
- Certificate in Quantitative Finance (CQF)
- Certified Financial Planner (CFP)
- Certified International Investment Analyst (CIIA)
- Certified Treasury Professional (CTP)
- Chartered Alternative Investment Analyst (CAIA)
- Chartered Financial Analyst (CFA)
- Chartered Wealth Manager (CWM)
- CISI Diploma in Capital Markets (MCSI)
- Financial Risk Manager (FRM)
- Professional Risk Manager (PRM)
- Various organizations offer executive education, CPD, or other focused training programs, including:
- See also qualifications in related fields:
- ^ 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".
- ^ 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.
- Prof. Aswath Damodaran - financial theory, with a focus in Corporate Finance, Valuation and Investments. Updated Data, Excel Spreadsheets.
- Web Sites for Discerning Finance Students (Prof. John M. Wachowicz) -Links to finance web sites, grouped by topic
- studyfinance.com - introductory finance web site at the University of Arizona
- SECLaw.com - law of the financial markets