Introduction to Finance

What is Finance?

Broad term

Finance

Money resources, income etc

Science of managing money

Financial system (economy) Composed of ?

Finance is getting money to purchase goods and services

HHs -excess money Corporations- need money

Purpose of the financial system is to make sure that the money flows to those who value it the highest example- corporations and HHs

example-Lend money

People will not lend and if1. They do they will require a larger repayment2. There are many things to do with their money3. The borrower is going to do something risky with

money4. The borrower has an unsavory reputation