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81-470: More than 140 billion transactions have been debited or credited to British bank accounts via Bacs since its inception; in 2019, 6.5 billion UK payments, worth £5 trillion, were made. At the end of November 2019, the number of single-day transactions processed by Bacs reached a high of 124 million; a monthly record was set in August 2018, when 580 million payments were processed. The Electronics Sub-Committee of

162-579: A Reserve Bank are eligible to use the service to send payments directly to, or receive payments from, other participants. Depository institutions can also use a correspondent relationship with a Fedwire participant to make or receive transfers indirectly through the system. Participants generally use Fedwire to handle large-value, time-critical payments, such as payments to settle interbank purchases and sales of federal funds; to purchase, sell, or finance securities transactions; to disburse or repay large loans; and to settle real estate transactions. The Department of

243-428: A broad range of subfields exists within finance. Asset- , money- , risk- and investment management aim to maximize value and minimize volatility . Financial analysis assesses the viability, stability, and profitability of an action or entity. Some fields are multidisciplinary, such as mathematical finance , financial law , financial economics , financial engineering and financial technology . These fields are

324-431: A high degree of computational complexity and are slow to converge to a solution on classical computers. In particular, when it comes to option pricing, there is additional complexity resulting from the need to respond to quickly changing markets. For example, in order to take advantage of inaccurately priced stock options, the computation must complete before the next change in the almost continuously changing stock market. As

405-492: A loan or other debt obligations. The main areas of personal finance are considered to be income, spending, saving, investing, and protection. The following steps, as outlined by the Financial Planning Standards Board, suggest that an individual will understand a potentially secure personal finance plan after: Corporate finance deals with the actions that managers take to increase the value of

486-738: A long-term strategic perspective regarding investment decisions that affect public entities. These long-term strategic periods typically encompass five or more years. Public finance is primarily concerned with: Central banks, such as the Federal Reserve System banks in the United States and the Bank of England in the United Kingdom , are strong players in public finance. They act as lenders of last resort as well as strong influences on monetary and credit conditions in

567-414: A mix of an art and science , and there are ongoing related efforts to organize a list of unsolved problems in finance . Managerial finance is the branch of finance that deals with the financial aspects of the management of a company, and the financial dimension of managerial decision-making more broadly. It provides the theoretical underpin for the practice described above , concerning itself with

648-585: A purpose-built computer centre were drawn up early that year. The building was completed in June 1972, with ICL equipment delivered in July. Full computer service was established after the relocation in October 1972. Dennis Gladwell officially opened the fully operational site alongside E. O. Faulkner on Wednesday, 22nd November 1972. The IBCB was initially controlled by BCH's Systems and Development Committee before it

729-447: A result, the finance community is always looking for ways to overcome the resulting performance issues that arise when pricing options. This has led to research that applies alternative computing techniques to finance. Most commonly used quantum financial models are quantum continuous model, quantum binomial model, multi-step quantum binomial model etc. The origin of finance can be traced to the beginning of state formation and trade during

810-737: A single-day record of 124 million transactions at the end of November. Bacs' scope has expanded to include third-party services (such as the Cash ISA Transfer Service) and the development, management and ownership of the Current Account Switch Service, which began in September 2013. The guaranteed service has reduced the time it takes for consumers, small businesses, and small charities to switch current accounts to seven working days, and has facilitated over six million switches. On 1 May 2018, Bacs became

891-446: A sophisticated mathematical model is required, and thus overlaps several of the above. As a specialized practice area, quantitative finance comprises primarily three sub-disciplines; the underlying theory and techniques are discussed in the next section: DCF valuation formula widely applied in business and finance, since articulated in 1938 . Here, to get the value of the firm , its forecasted free cash flows are discounted to

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972-692: A subject of study, it is related to but distinct from economics , which is the study of the production , distribution , and consumption of goods and services . Based on the scope of financial activities in financial systems , the discipline can be divided into personal , corporate , and public finance . In these financial systems, assets are bought, sold, or traded as financial instruments , such as currencies , loans , bonds , shares , stocks , options , futures , etc. Assets can also be banked , invested , and insured to maximize value and minimize loss. In practice, risks are always present in any financial action and entities. Due to its wide scope,

1053-460: A total of £4.4 trillion, including 3.6 billion direct debits. The number of payments passing through the Bacs system topped six billion for the first time the following year, with a value of £4.6 trillion. The number of direct debits processed in 2015 increased by 239 million over the 2014 total. A record 103 million transactions were processed in a single July 2015 day. That year, it was announced that

1134-398: A well-diversified portfolio, achieved investment performance will, in general, largely be a function of the asset mix selected, while the individual securities are less impactful. The specific approach or philosophy will also be significant, depending on the extent to which it is complementary with the market cycle . Risk management here is discussed immediately below. A quantitative fund

1215-622: A wholly-owned subsidiary of Pay.UK (formerly known as the New Payment System Operator). Clearing (finance) In banking and finance , clearing refers to all activities from the time a commitment is made for a transaction until it is settled . This process turns the promise of payment (for example, in the form of a cheque or electronic payment request) into the actual movement of money from one account to another. Clearing houses were formed to facilitate such transactions among banks. In trading, clearing

1296-524: Is a major pan-European clearing system for retail payments which has the potential to become a SIPS. In the United States, the Federal Reserve System is a SIPS. The first payment method that required clearing was cheques, as cheques would have to be returned to the issuing bank for payment. Though many debit cards are drawn against chequing accounts, direct deposit and point-of-purchase electronic payments are cleared through networks separate from

1377-482: Is about performing valuation and asset allocation today, based on the risk and uncertainty of future outcomes while appropriately incorporating the time value of money . Determining the present value of these future values, "discounting", must be at the risk-appropriate discount rate , in turn, a major focus of finance-theory. As financial theory has roots in many disciplines, including mathematics, statistics, economics, physics, and psychology, it can be considered

1458-550: Is an electronic payment system, developed jointly by the private sector and the Federal Reserve in the early 1970s as a more efficient alternative to checks. Since then, the ACH has evolved into a nationwide mechanism that processes credit and debit transfers electronically. ACH credit transfers are used to make direct deposit payroll payments and corporate payments to vendors. ACH debit transfers are used by consumers to authorize

1539-400: Is an instruction from a customer to a bank (or building society ) to authorize a third party to collect an amount from an account, often for regular payments. Over 4.5 billion direct debits were processed in 2019. Bacs Direct Credit is a service which enables organizations of all sizes to make payments direct into a bank or building society account. There are more than 150,000 organizations in

1620-520: Is backed by the Current Account Switch Guarantee, which promises to reimburse account holders if they incur fees or charges as a result of the switchover. The Cash ISA Transfer Service, introduced in October 2012, offers a quicker and easier transfer process while reducing paper flow and increasing efficiency. The Biller Update Service was introduced in June 2013. Bacs processed a record 5.8 billion transactions in 2014 for

1701-436: Is managed using computer-based mathematical techniques (increasingly, machine learning ) instead of human judgment. The actual trading is typically automated via sophisticated algorithms . Risk management , in general, is the study of how to control risks and balance the possibility of gains; it is the process of measuring risk and then developing and implementing strategies to manage that risk. Financial risk management

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1782-444: Is mathematics that is actually important in this new scenario Finance theory is heavily based on financial instrument pricing such as stock option pricing. Many of the problems facing the finance community have no known analytical solution. As a result, numerical methods and computer simulations for solving these problems have proliferated. This research area is known as computational finance . Many computational finance problems have

1863-569: Is necessary because the speed of trades is much faster than the cycle time for completing the underlying transaction. It involves the management of post-trading, pre-settlement credit exposures to ensure that trades are settled in accordance with market rules, even if a buyer or seller should become insolvent prior to settlement. Processes included in clearing are reporting /monitoring, risk margining , netting of trades to single positions, tax handling, and failure handling. Systemically important payment systems (SIPS) are payment systems which have

1944-657: Is often indirect, through a financial intermediary such as a bank , or via the purchase of notes or bonds ( corporate bonds , government bonds , or mutual bonds) in the bond market . The lender receives interest, the borrower pays a higher interest than the lender receives, and the financial intermediary earns the difference for arranging the loan. A bank aggregates the activities of many borrowers and lenders. A bank accepts deposits from lenders, on which it pays interest. The bank then lends these deposits to borrowers. Banks allow borrowers and lenders, of different sizes, to coordinate their activity. Investing typically entails

2025-497: Is referred to as "wholesale finance". Institutions here extend the products offered , with related trading, to include bespoke options , swaps , and structured products , as well as specialized financing ; this " financial engineering " is inherently mathematical , and these institutions are then the major employers of "quants" (see below ). In these institutions, risk management , regulatory capital , and compliance play major roles. As outlined, finance comprises, broadly,

2106-471: Is the branch of economics that studies the interrelation of financial variables , such as prices , interest rates and shares, as opposed to real economic variables, i.e. goods and services . It thus centers on pricing, decision making, and risk management in the financial markets , and produces many of the commonly employed financial models . ( Financial econometrics is the branch of financial economics that uses econometric techniques to parameterize

2187-485: Is the practice of protecting corporate value against financial risks , often by "hedging" exposure to these using financial instruments. The focus is particularly on credit and market risk, and in banks, through regulatory capital, includes operational risk. Financial risk management is related to corporate finance in two ways. Firstly, firm exposure to market risk is a direct result of previous capital investments and funding decisions; while credit risk arises from

2268-400: Is then often referred to as "business finance". Typically, "corporate finance" relates to the long term objective of maximizing the value of the entity's assets , its stock , and its return to shareholders , while also balancing risk and profitability . This entails three primary areas: The latter creates the link with investment banking and securities trading , as above, in that

2349-665: The Bronze Age . The earliest historical evidence of finance is dated to around 3000 BCE. Banking originated in West Asia, where temples and palaces were used as safe places for the storage of valuables. Initially, the only valuable that could be deposited was grain, but cattle and precious materials were eventually included. During the same period, the Sumerian city of Uruk in Mesopotamia supported trade by lending as well as

2430-679: The Federal Reserve banks. The Federal Reserve therefore performs an intermediary role, clearing and settling international bank payments. Prior to the completion of the clearing, the banks settle payment transactions by debiting the accounts of the depository institutions, while crediting the accounts of depository institutions receiving the payments. The Fedwire Funds Service provides a real-time gross settlement system in which more than 9,500 participants are able to initiate electronic funds transfers that are immediate, final, and irrevocable. Depository institutions that maintain an account with

2511-475: The London Stock Exchange , and the two would often list each other's stocks. To clear the trades, time was required for the physical stock certificate or cash to move from Amsterdam to London and back. This led to a standard settlement period of 14 days, which was the time it usually took for a courier to make the journey between the two cities. Most exchanges copied the model, which was used for

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2592-446: The managerial application of the various finance techniques . Academics working in this area are typically based in business school finance departments, in accounting , or in management science . The tools addressed and developed relate in the main to managerial accounting and corporate finance : the former allow management to better understand, and hence act on, financial information relating to profitability and performance;

2673-724: The numerical methods applied here. Experimental finance aims to establish different market settings and environments to experimentally observe and provide a lens through which science can analyze agents' behavior and the resulting characteristics of trading flows, information diffusion, and aggregation, price setting mechanisms, and returns processes. Researchers in experimental finance can study to what extent existing financial economics theory makes valid predictions and therefore prove them, as well as attempt to discover new principles on which such theory can be extended and be applied to future financial decisions. Research may proceed by conducting trading simulations or by establishing and studying

2754-626: The 1950s, cleared derivatives and commodities for a number of London exchanges. Clearing houses who clear financial instruments, such as LCH, are generally called central counterparties (CCPs) . In the wake of the financial crisis of 2007–08 the G20 leaders agreed at the 2009 Pittsburgh Summit that all standardised derivatives contracts should be traded on exchanges or electronic trading platforms and cleared through central counterparties (CCPs). Although some derivatives were already traded on exchange and cleared, many over-the-counter derivatives that met

2835-740: The Bankers Clearing House, which was tasked with setting up a computer facility and led by Dennis Gladwell to steer the creation and development of what would become the Bankers Automated Clearing Services. The electronic transfer of funds began in 1968 in BCH's (Bankers Clearing House) computer room. A new location was found in 1971: a converted warehouse in Edgware on a site used by Amy Johnson and Jim Mollison on their solo flights to Australia. Plans for

2916-547: The Committee of London Clearing Bankers was formed in the late 1950s to consider the automation of cheque-clearing . The committee set up a New Services Working Party in 1965 to examine the possibility of exchanging data between banks without using paper – specifically, the automated exchange of standing order credits. This led to the creation of the Inter-Bank Computer Bureau (IBCB) within

2997-410: The Current Account Switch Service will transfer the old-account activity to the new one: moving incoming and outgoing payments, transferring the account balance, and closing the old account. Although the process takes place over seven working days, the account is transferred on the final day; customers use the old account until the agreed switch day, and then use the new account with no loss of service. It

3078-766: The Treasury, other federal agencies, and government-sponsored enterprises also use the Fedwire Funds Service to disburse and collect funds. In 2003, the Reserve Banks processed 123 million Fed-wire payments having a total value of $ 436.7 trillion. The Fedwire Securities Service provides safekeeping, transfer, and settlement services for securities issued by the Treasury, federal agencies, government-sponsored enterprises, and certain international organizations. The Reserve Banks perform these services as fiscal agents for these entities. Securities are safekept in

3159-483: The U.S. Treasury to hold securities accounts). Other parties, specifically brokers and dealers, typically hold and transfer securities through depository institutions that are Fedwire participants and that provide specialized government securities clearing services. In 2003, the Fedwire Securities Service processed 20.4 million securities transfers with a value of $ 267.6 trillion. The ACH Network

3240-543: The UK using Bacs Direct Credit and it has been widely adopted to pay benefits, wages and salaries – nearly 90 per cent of the country's workforce is paid this way and one billion benefit payments are made via Bacs Direct Credit – it is also the payment method used for a range of other applications such as pension payments, employee expenses, insurance settlements, dividends and refunds. Since its September 2013 introduction, more than six million UK current accounts have been switched;

3321-478: The above " Fundamental theorem of asset pricing ". The subject has a close relationship with financial economics, which, as outlined, is concerned with much of the underlying theory that is involved in financial mathematics: generally, financial mathematics will derive and extend the mathematical models suggested. Computational finance is the branch of (applied) computer science that deals with problems of practical interest in finance, and especially emphasizes

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3402-539: The additional computer systems required to handle large volumes of trades, and the opening of new financial markets in the 1980s, such as the 1986 big bang in the UK, led to a number of exchanges separating or contracting the clearing and settlement functions to dedicated organisations. In some specialist financial markets, clearing had already been separate from trading. One example was the London Clearing House (later renamed LCH.Clearnet ), which, since

3483-501: The behavior of people in artificial, competitive, market-like settings. Behavioral finance studies how the psychology of investors or managers affects financial decisions and markets and is relevant when making a decision that can impact either negatively or positively on one of their areas. With more in-depth research into behavioral finance, it is possible to bridge what actually happens in financial markets with analysis based on financial theory. Behavioral finance has grown over

3564-579: The business's credit policy and is often addressed through credit insurance and provisioning . Secondly, both disciplines share the goal of enhancing or at least preserving, the firm's economic value , and in this context overlaps also enterprise risk management , typically the domain of strategic management . Here, businesses devote much time and effort to forecasting , analytics and performance monitoring . (See ALM and treasury management .) For banks and other wholesale institutions, risk management focuses on managing, and as necessary hedging,

3645-891: The capital raised will generically comprise debt, i.e. corporate bonds , and equity , often listed shares . Re risk management within corporates, see below . Financial managers—i.e. as distinct from corporate financiers—focus more on the short term elements of profitability, cash flow, and " working capital management " ( inventory , credit and debtors ), ensuring that the firm can safely and profitably carry out its financial and operational objectives; i.e. that it: (1) can service both maturing short-term debt repayments, and scheduled long-term debt payments, and (2) has sufficient cash flow for ongoing and upcoming operational expenses . (See Financial management and Financial planning and analysis .) Public finance describes finance as related to sovereign states, sub-national entities, and related public entities or agencies. It generally encompasses

3726-502: The characteristic that a failure of these systems could potentially endanger the operation of the whole economy. In general, these are the major payment clearing or real-time gross settlement systems of individual countries, but in the case of Europe, there are certain pan-European payment systems. TARGET2 is a pan-European SIPS dealing with major inter-bank payments. STEP2 , operated by the Euro Banking Association

3807-399: The cheque clearing system (in the United States, the Federal Reserve's Automated Clearing House and the private Electronic Payments Network ). Securities clearing was required to ensure payment had been received and the physical stock certificate delivered. This caused a few days’ delay between the trade date and final settlement . To reduce the risk associated with failure to deliver on

3888-424: The criteria needed to be novated to CCPs as a result. The United States clearing system, known as CHIPS , is the largest clearing system in the world. Millions of transactions, valued in the trillions of dollars, are conducted between sellers and purchasers of goods, services, or financial assets daily. Most of the payments making up the transactions flow between several banks, most of which maintain accounts with

3969-461: The economy. Development finance , which is related, concerns investment in economic development projects provided by a (quasi) governmental institution on a non-commercial basis; these projects would otherwise not be able to get financing . A public–private partnership is primarily used for infrastructure projects: a private sector corporate provides the financing up-front, and then draws profits from taxpayers or users. Climate finance , and

4050-660: The end of December 2005 or return to using cheques. When BACSTEL-IP was introduced, all software used to make a connection to Bacs required approval; it is only possible to connect with software from the list of Bacs Approved Solution Suppliers (BASS) or an approved bureau. New service users were required to use AUDDIS, a more efficient system for organizations to send new direct-debit instructions to their customers' bank or building society electronically instead of on paper, in 2008. That year, annual direct-debit volume surpassed three billion; volumee reached 3.5 billion by 2013, with 100 billion payments processed since 1968. A direct debit

4131-407: The end of November 2018, the number of daily transactions processed by Bacs reached a new high of 123 million; a monthly record of 580 million payments was set in August of that year. In January 2019, it was announced that Bacs had processed a record 6.4 billion UK payments, totalling just under £5 trillion, the previous year. Bacs processed 6.5 billion UK payments totalling £5 trillion in 2019, setting

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4212-672: The excess, intending to earn a fair return. Correspondingly, an entity where income is less than expenditure can raise capital usually in one of two ways: (i) by borrowing in the form of a loan (private individuals), or by selling government or corporate bonds ; (ii) by a corporation selling equity , also called stock or shares (which may take various forms: preferred stock or common stock ). The owners of both bonds and stock may be institutional investors —financial institutions such as investment banks and pension funds —or private individuals, called private investors or retail investors. (See Financial market participants .) The lending

4293-510: The field is referred to as quantitative finance and / or mathematical finance, and comprises primarily the three areas discussed. The main mathematical tools and techniques are, correspondingly: Mathematically, these separate into two analytic branches : derivatives pricing uses risk-neutral probability (or arbitrage-pricing probability), denoted by "Q"; while risk and portfolio management generally use physical (or actual or actuarial) probability, denoted by "P". These are interrelated through

4374-416: The field. Quantum finance is an interdisciplinary field, in which theories and methods developed by quantum physicists and economists are applied to solve financial problems. It represents a branch known as econophysics. Although quantum computational methods have been around for quite some time and use the basic principles of physics to better understand the ways to implement and manage cash flows, it

4455-410: The firm to the shareholders, the sources of funding and the capital structure of corporations, and the tools and analysis used to allocate financial resources. While corporate finance is in principle different from managerial finance , which studies the financial management of all firms rather than corporations alone, the concepts are applicable to the financial problems of all firms, and this area

4536-451: The first scholarly work in this area. The field is largely focused on the modeling of derivatives —with much emphasis on interest rate- and credit risk modeling —while other important areas include insurance mathematics and quantitative portfolio management . Relatedly, the techniques developed are applied to pricing and hedging a wide range of asset-backed , government , and corporate -securities. As above , in terms of practice,

4617-627: The flows of capital that take place between individuals and households ( personal finance ), governments ( public finance ), and businesses ( corporate finance ). "Finance" thus studies the process of channeling money from savers and investors to entities that need it. Savers and investors have money available which could earn interest or dividends if put to productive use. Individuals, companies and governments must obtain money from some external source, such as loans or credit, when they lack sufficient funds to run their operations. In general, an entity whose income exceeds its expenditure can lend or invest

4698-532: The form of electronic records of securities held in custody accounts. Securities are transferred according to instructions provided by parties with access to the system. Access to the Fed-wire Securities Service is limited to depository institutions that maintain accounts with a Reserve Bank, and a few other organizations, such as federal agencies, government-sponsored enterprises, and state government treasurer’s offices (which are designated by

4779-400: The foundation of business and accounting . In some cases, theories in finance can be tested using the scientific method , covered by experimental finance . The early history of finance parallels the early history of money , which is prehistoric . Ancient and medieval civilizations incorporated basic functions of finance, such as banking, trading and accounting, into their economies. In

4860-712: The fundamental risk mitigant here, investment managers will apply various hedging techniques as appropriate, these may relate to the portfolio as a whole or to individual stocks . Bond portfolios are often (instead) managed via cash flow matching or immunization , while for derivative portfolios and positions, traders use "the Greeks" to measure and then offset sensitivities. In parallel, managers — active and passive — will monitor tracking error , thereby minimizing and preempting any underperformance vs their "benchmark" . Quantitative finance—also referred to as "mathematical finance"—includes those finance activities where

4941-506: The heart of investment management is asset allocation — diversifying the exposure among these asset classes , and among individual securities within each asset class—as appropriate to the client's investment policy , in turn, a function of risk profile, investment goals, and investment horizon (see Investor profile ). Here: Overlaid is the portfolio manager's investment style —broadly, active vs passive , value vs growth , and small cap vs. large cap —and investment strategy . In

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5022-431: The infrastructure on which payment schemes operate, and BPSL maintains the schemes. Bacs users began moving from the telephone dial-up BACSTEL service (introduced in 1983 to replace magnetic media) to BACSTEL-IP, a faster, more secure Internet-based service, in 2003. All Bacs users, including businesses that make payments to their suppliers or operate their staff payroll electronically, were required to move to BACSTEL-IP by

5103-444: The last few decades to become an integral aspect of finance. Behavioral finance includes such topics as: A strand of behavioral finance has been dubbed quantitative behavioral finance , which uses mathematical and statistical methodology to understand behavioral biases in conjunction with valuation. Quantum finance involves applying quantum mechanical approaches to financial theory, providing novel methods and perspectives in

5184-423: The late 19th century, the global financial system was formed. In the middle of the 20th century, finance emerged as a distinct academic discipline, separate from economics. The earliest doctoral programs in finance were established in the 1960s and 1970s. Today, finance is also widely studied through career -focused undergraduate and master's level programs. As outlined, the financial system consists of

5265-427: The latter, as above, are about optimizing the overall financial structure, including its impact on working capital. Key aspects of managerial finance thus include: The discussion, however, extends to business strategy more broadly, emphasizing alignment with the company's overall strategic objectives; and similarly incorporates the managerial perspectives of planning, directing, and controlling. Financial economics

5346-514: The next few hundred years. With the advent of the computer in the 1970s and 1980s, there was a move to reduce settlement times in most exchanges, leading by stages to a current standard of one day, known as T+1 . With the advent of electronic settlement, and a move to dematerialisation of securities , standardised clearing systems were required, as well as standardised securities depositories , custodians and registrars . Until this point, many exchanges would act as their own clearing house, however

5427-508: The number of payments handled by Bacs since 1968 had exceeded 110 billion. In 2016, 6.22 billion transactions were processed with a value of £4.8 trillion; the number of direct-debit payments exceeded four billion. Daily processing records were set twice that year: 109.3 million payments on one day at the end of September, surpassing the April high of 103.7 million. A record 6.34 billion payments were processed in 2017, totalling £4.9 trillion. At

5508-448: The payment of insurance premiums, mortgages, loans, and other bills from their account. The ACH is also used by businesses to concentrate funds at a primary bank and to make payments to other businesses. In 2003, the Reserve Banks processed 6.5 billion ACH payments with a value of $ 16.8 trillion. Finance Finance refers to monetary resources and to the study and discipline of money , currency , assets and liabilities . As

5589-444: The present using the weighted average cost of capital for the discount factor. For share valuation investors use the related dividend discount model . Financial theory is studied and developed within the disciplines of management , (financial) economics , accountancy and applied mathematics . Abstractly, finance is concerned with the investment and deployment of assets and liabilities over "space and time"; i.e., it

5670-409: The purchase of stock , either individual securities or via a mutual fund , for example. Stocks are usually sold by corporations to investors so as to raise required capital in the form of " equity financing ", as distinct from the debt financing described above. The financial intermediaries here are the investment banks . The investment banks find the initial investors and facilitate the listing of

5751-749: The rate of 20 percent per year. By 1200 BCE, cowrie shells were used as a form of money in China . The use of coins as a means of representing money began in the years between 700 and 500 BCE. Herodotus mentions the use of crude coins in Lydia around 687 BCE and, by 640 BCE, the Lydians had started to use coin money more widely and opened permanent retail shops. Shortly after, cities in Classical Greece , such as Aegina , Athens , and Corinth , started minting their own coins between 595 and 570 BCE. During

5832-724: The related Environmental finance , address the financial strategies, resources and instruments used in climate change mitigation . Investment management is the professional asset management of various securities—typically shares and bonds, but also other assets, such as real estate, commodities and alternative investments —in order to meet specified investment goals for the benefit of investors. As above, investors may be institutions, such as insurance companies, pension funds, corporations, charities, educational establishments, or private investors, either directly via investment contracts or, more commonly, via collective investment schemes like mutual funds, exchange-traded funds , or REITs . At

5913-413: The relationships suggested.) The discipline has two main areas of focus: asset pricing and corporate finance; the first being the perspective of providers of capital, i.e. investors, and the second of users of capital; respectively: Financial mathematics is the field of applied mathematics concerned with financial markets ; Louis Bachelier's doctoral thesis , defended in 1900, is considered to be

5994-475: The securities, typically shares and bonds. Additionally, they facilitate the securities exchanges , which allow their trade thereafter, as well as the various service providers which manage the performance or risk of these investments. These latter include mutual funds , pension funds , wealth managers , and stock brokers , typically servicing retail investors (private individuals). Inter-institutional trade and investment, and fund-management at this scale ,

6075-401: The service reported a seven-day switching success rate of 99.4 per cent. It offers consumers, small businesses, trusts and small charities a way of switching current accounts to increase competition and support the entry of new banks in the current-account marketplace. The service is offered by 49 banks and building societies. When a current account is opened with a new bank or building society,

6156-623: The three areas of personal finance, corporate finance, and public finance. These, in turn, overlap and employ various activities and sub-disciplines—chiefly investments , risk management, and quantitative finance . Personal finance refers to the practice of budgeting to ensure enough funds are available to meet basic needs, while ensuring there is only a reasonable level of risk to lose said capital. Personal finance may involve paying for education, financing durable goods such as real estate and cars, buying insurance , investing, and saving for retirement . Personal finance may also involve paying for

6237-490: The trade on settlement date , a clearing agent or clearing house often sat between the trading parties. The trading parties would deliver the physical stock certificate and the payment to the clearing house, who would then ensure the certificate was handed over and the payment complete. This process is known as delivery versus payment . During the 1700s the Amsterdam Stock Exchange had close links with

6318-446: The use of interest. In Sumerian, "interest" was mas , which translates to "calf". In Greece and Egypt, the words used for interest, tokos and ms respectively, meant "to give birth". In these cultures, interest indicated a valuable increase, and seemed to consider it from the lender's point of view. The Code of Hammurabi (1792–1750 BCE) included laws governing banking operations. The Babylonians were accustomed to charging interest at

6399-635: The various positions held by the institution—both trading positions and long term exposures —and on calculating and monitoring the resultant economic capital , and regulatory capital under Basel III . The calculations here are mathematically sophisticated, and within the domain of quantitative finance as below. Credit risk is inherent in the business of banking, but additionally, these institutions are exposed to counterparty credit risk . Banks typically employ Middle office "Risk Groups" , whereas front office risk teams provide risk "services" (or "solutions") to customers. Additional to diversification ,

6480-400: Was controlled by its own managing committee. The committee decided that a separate limited company should be created, and Bankers Automated Clearing Services was registered on 10 September 1971. Adopting BACS as its name, the company registered the acronym as a trademark on 1 December 1971. It was renamed BACS Limited on 20 March 1986. On 1 December 2003, Bacs Payment Schemes Limited (BPSL)

6561-448: Was split from Bacs Limited as a nonprofit organisation with members of the banking industry promoting the use of (and setting the rules for) automated-payment schemes and Bacs Limited owning the infrastructure to operate them. Bacs Limited used that name for one year, becoming Voca Limited on 12 October 2004. Voca Limited merged with the UK national switch provider LINK Interchange Network on 2 July 2007, and became Vocalink . Vocalink owns

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