Have you ever wondered why people going gaga over Bulls and Bears?! No not as a hardcore nature-lover, in the midst of jungle, but in the busy city life. Yes, they are the finance freaks! They are glued to their comp or busy talking over the phone. They do really make the Wall Street such a busy place. Sounds alien? Okay hold on, we will take a gradual look into the interesting and complicated word of finance and economics, not only gauging the national income, the stock traders, but also some basic details on financial aspect, like banking, insurance, corporate finance and others.
Finance is that branch of economics that deals with management of money and assets involving banking, investments, credits, and so on. As a verb, let's look at the activities that happen around us. One needs a proper planning, or estimation in a business management, like arranging fund, assessing the profit/loss factor, etc. In the personal front arranging ones' finance may be his or her saving ability or investments in various instruments available.
A nation needs to have a budget to run the economy, have to plan accordingly regarding the general welfares based on the revenue generated from the tax-payers, or foreign exchanges earned over a period. Whether it's private, public, or personal front, the common mantra here is proper planning, understanding of income and expenditure, and risk-factors involved.Now, where do we find these entire activities taking place, or in common man's term where's the market place? Its everywhere around us, but happens in a very organized fashion, so we will call them in different names, like Stock (equity) markets, Forex market, etc.
I told you about the Bulls and Bears, yes they roam around freely at the Stock markets, but don't worry, they are simply the market jargons that represent the stock-market confidence, actually the share price indices. Stock market is the place where trading of company stocks are done. This is a regulatory body where the company stocks and derivatives are listed and facilitates buying and selling. Now you know that NASDAQ, NYSE, and the London Stock Exchange are the likely places you can find bulls and bears apart from the zoological garden!
The Foreign Exchange or the Forex market is regarded to be the largest financial market place based on the volume of transaction every day. It involves regulatory banking bodies, government, MNCs, and other financial institutions. Finance market place is basically the exchange or trading place for one currency with other. There isn't' any particular institutional body where this trading happens, but usually an Over-the-Counter practice, where different currency instruments are exchanged. Even the rate varies from place to place, that is why you will find different values for one dollar in other countries.
Now, when you are gaining a fair bit of idea regarding the financial markets,
and wondering, if only bulls, bears, or bullion are the central players, then another piece of surprise! It's all about us! Yes we the people are the participants here, but every group has a different role to play here, that how you might come across the terms like Investors, speculators, etc.Investors are those groups of people or institution who invests their money in various financial instruments like equities, real estate, funding of any private or government entrepreneurial projects, main objective being the returns or the profits from their investments.
Speculators can be termed as manipulators, not in a shrewd way, but in a very calculative and analyzed way. They are different from the investors in the sense that they look to make profit from the fluctuation in the price of various financial commodity like shares, bonds, real estate, etc. They usually resort to the practice of holding apart from buying and selling or short-selling of commodities.
Yes, this interesting world of finance does touch our personal lives too, if not how can I think of buying and owning a house, educating my child, why worry about inheritance? All depends upon the fact how organized I am with my Personal finances. This involves ones' earning, savings trait, investing skill or luck, credit appraisals, insurance coverage, and last but not the least the tax returns.
On the Corporate Front, things are slightly different. First of all very different set of law governing this area, and arguably so because of the volume and size involved. Concerns like profit and loss, earning and expenditure are addressed to minute detail. Funding for any major take-over or project installation needs to be approved by the share holders, they also need to study and understand the profitable sectors for probable investments. Hope this brief article will help you to have a grab and generate necessary interest towards the world of finance and management and immense opportunity.