why study finance essay

why study finance essay

The Importance of Studying Finance

1. Introduction

Like manufacturing, marketing and personnel function, the financial function is also a decision-making area of a firm. Finance is a key area of business and public sector management, serving the decision makers to increase efficiency, create value, grow opportunities and enhance public welfare. Financial decisions are necessary to exchange available money for each other, modify the size and level of distribution of holding and produce a way to admire the investment criterion. Since the time value of money concept is crucial and related to leverage concept, the financial decision-maker has the unique status in the area of finance subject to objectives. Discussing the business management, it is impossible to avoid the fundamental importance of financial decisions. While finance is both science and art, application of finance is a challenging subject. Because of their popularity, ETFs are substantial amongst the most liquid money markets, driving prices over the period for the entirety of various financial assets and economic events. ETF prices are subject to the conditions of market makers’ ability to materialize arbitrage opportunities simultaneously, thereby increasing liquidity for fund investors. ETF benefits are also associated with these features of liquidity. Furthermore, hedging purposes generate short sales which illuminate fundamental risk investment concentrated in information technology ETFs, the Treasury bond ETF products, the semi-ETFs associated with the energy sector and some sectors that are difficult to lend.

The importance of studying finance has become quite evident to the present generation. Without the applications of finance, no business can really get underway or earn profit. This is because finance is the lifeblood of a business, especially for micro, small and medium enterprises; yet very few people understand it. Because of the importance of finance, students need to learn the advanced applications of finance, accounting and economics to develop the coursework title of finance. To be a person who has a great idea and the ability to finance a business and is able to make well-done decisions, namely the main aspects of the life of a successful entrepreneur. An entrepreneur also needs to understand the workings of finance, since when the business grows the entrepreneur must be capable of creating objectives and strategies for the future such as the implementation of infrastructure and technological updates, opening new stores or distributing capital to other strategic investments, evaluating ways to strengthen a strong business brand, diversification of economic activities, forums dedicated to investments or mergers between companies, rendering the marketing plan of a successful product, relations and commercial partnerships and the ability to attract customers, immediately after its creation, supporting customers until its autonomy, allowing the final return of profits. A good understanding of finance is the main condition for every entrepreneur. In this paper, only some considerations about the importance of studying finance are presented.

2. Understanding Personal Finances

Individuals that also do not take the time to understand effective financial planning principles view their money as unnecessary expenses instead of tools for their financial future. When they earn extra money, it is normal that they do not think about investing, but they start to think about the new car or the new house instead of using this money to put their finances in a better situation. Little by little, we start considering our money the product of our effort and the time we invested to get it. Finally, individuals who have not mastered the principles of personal financial planning tend to end up blaming others for their lack of financial well-being. Traits like envy, jealousy, and compulsion usually appear at any time, mainly when the people around us start to achieve some small success in our financial life.

One of the most important and complex subjects any individual will need to understand is the subject of personal finance or investing. Individuals that do not understand the concept of time tend to make justifications like trying to save money so you can spend it after the summer or trying to earn a promotion at work so that next summer you can take a vacation and go on a nice vacation. These individuals will never begin to worry about realizing their dreams and understanding this notion of time when it comes to their personal finances and the idea of having money work for you instead of you having to work for money.

3. Navigating the Business World

Companies need people specialized in finance to perform a wide variety of functions. Finance graduates who enter into investment banking need strong numerical skills. They should also be able to formulate their thoughts concretely, both verbally and in writing. When students take courses in investment, corporate finance, business, or other finance-related coursework, as well as various business cases, they will be ready to practice the skills required to structure financial solutions in the real world. In other words, finance-related courses tend to be quite useful when students apply the skills learned. With a solid understanding of finance and practical skills through the various courses to be taken, finance students will be clubbed as deliberate critical thinkers, which is normally the first important step needed to reach the unfamiliar or the daily world of a person in pondering matters. This helps students gradually internalize principles and methodologies applied in finance, applying them to principles with logic and context, and focusing not only on the scales and characteristics of financial systems.

In addition to being well-versed in all areas of business, finance students should be able to think critically, communicate complex problems effectively, forecast or set expectations, understand underlying models and theories, understand various forms of financial data, and apply such knowledge to address real problems in the business world. Those who excel in financial performance, the ratio of liquid assets to liabilities or the amount of capital available, sometimes approach finance in an aggressive and proactive way, while other businesses are more conservative about growth, focusing on building structures and liquid technologies.

4. Making Informed Investment Decisions

Whoever is investing in shares isn’t doing that with the view of losing money; even short sellers make their investment decisions sure of the falling share price. How do many regularly exiting IPO investors do? The primary aim of anybody buying shares is to multiply their net worth in a manner not made possible by plain vanilla bank saving accounts of times past. But what should one learn before investing in shares? The sheer litany of knowledge areas is enough to scare off most from holding shares. Business Education Financial Glossary is singularly responsible for scaring off millions from investing. When a student understands the basics of investing – or when an individual is conversant with household finance – that is the golden door of personal investing. Students shouldn’t hence shun financiers; nor should finance teachers shun inquisitive students.

Finance knowledge can endow one with hitherto unforeseen manifold abilities. This knowledge isn’t a magic or divine gift handed to a selected few only; any individual can acquire it. And it isn’t costly to handle; freeness is an obvious adjective associated with Open Finance Education. It’s all the more reachable; Wall & Main are at your fingertips. While young, if finance is taught right – hands-on in our jargon, the virtual stock trading variety in theirs – they will remain glued to one of the all: cell phones and internet. Building money with what is in effect a video game – how alluring that is! This article, therefore, demonstrates the precept – where large gains are to be made for zero cost, none will refuse.

5. Contributing to Economic Growth

Service-oriented businesses (for example, hospitals, education, retail trade and tourism) have limited assets. This set of industries depends on their services and has no physical assets that can be used as collateral to access financial markets. Thus, these sectors depend on the financial markets for their growth. In addition, the business sector is the backbone of an economy that faces problems in obtaining financial support. Small and medium-sized business sectors may also have problems in obtaining loans. Students who study finance make better financial decisions than students who do not study finance. Since the service sector lacks the financial elements necessary, finance is important in strengthening small and medium-sized businesses. Therefore, it is important for students to develop the study of finance to strengthen the service industry and to advance financial markets.

With efficient markets and better investments, the financial market enhances economic growth. The primary goal of a corporation is to create wealth for its owner. If this objective is achieved, citizens will live more comfortably and states and the middle class will prosper. Similarly, the corporation and its financial administration are affected by economic growth. In order to promote financial stability and foster economic growth, companies must explore various financial options and choose the best possible financing source. Therefore, it is widely held by various researchers that efficient financial markets and better corporate finance lead to economic growth. As a result, it is important to develop and foster these markets by providing education in finance.