intro to finance

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  1. What is finance?
    The science or study of the management of money
  2. Why is finance considered a social science?
    Finance like all social sciences is concerned with human behaviour
  3. Why is uncertainty present in finance?
    • Finance is concerned with human behaviour. Human behaviour is uncertain; hence, uncertainty exists in finance. 
    • Finance is also concerned with the future- as the future cannot be predicted, uncertainty exists
  4. What is the difference between finance and economics?
    • Economics is concerened with the allocation of scarce resources; finance is concerned with with the allocation of scarce resources over time. 
    • Economics focuses on exchanges in which money is one of the items traded whereas in finance, money appears on both sides of the trade
  5. Identify and explain the 4 characteristics of financial transactions
    • Time: money now is traded for money in the future
    • Uncertainty: the amount and timing of money in the future is uncertain
    • Options: in some contracts, a party can have the option to make a decision in the future that affects the subsequent transfer of money
    • Information: info about the future can reduce uncertainty associated with the amount and timing of future monetary transfers
  6. What are the benefits of studying finance?
    • Ability to manage on finances
    • operate in the world of business
    • to pursue a career in finance
  7. Identify and distinguish between the different areas of study in finance
    • Investment finance: looks at finance from an individual investor's point of view
    • Corporate: looks at finance from the company's point of view.
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intro to finance
2015-05-23 04:31:48
ACC1000 intro to finance
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