The Department of Finance
Finance is about return and risk. It is concerned with achieving the best return given the level of risk or alternatively how to reduce the risk for a desired level of return. These two parameters as they are called - return and risk - are the building blocks for making investment decisions, trading decisions, financing decisions and thinking strategically.
Investors participating in the share, bond and commodity markets make choices about returns and risk. They may diversify their investments to reduce risk, they may hedge risk, they may insure against risk all to achieve a desired return. Financial markets price risk.
Businesses, government and other organisation make investment decisions and financing decisions. Finance is concerned with how the organisations add value for the stakeholders when making these decisions. A listed public company needs to invest in assets that will increase the shareholders' returns. Are the organisations structured financially and operationally in a way that manages risk and increases returns. Financial performance and the impact that governance - how the board of directors operates and management has upon it is important.
Mergers and acquisitions, corporate restructuring, divestment of assets, company failure and how to structure emolument plans to maximise returns at minimum risk are part of the range of specific topics finance includes in its ever increasing and interesting domain.
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