AREAS

OF
FINANCE
PRELIM LESSON 2
PRIVATE FINANCE
The management of financial resources of private individuals, non-governmental
organizations, and private organizations in accordance with the prescribed financial
policy and priority of the person or business organizations.
PUBLIC FINANCE
The allocation of government income generated from either taxation or borrowings and
the government expenditure based on the approved national and local appropriation or
budget. Public finance is also termed as fiscal administration.
PERSONAL FINANCE
A sub-category of private finance which is directed towards the management of personal
resources of an individual. The income of an individual is sourced from compensation,
exercise of profession, or business income as a sole proprietor. Income is allocated based
on the individual’s personal needs such as household expenses, education,
hospitalization, and acquisition of personal and real properties.
BUSINESS FINANCE
An area of finance that focuses on the handling and management of financial resources of
a business organization. The three major divisions of business finance are financial
management, capital market, and financial investment.
FINANCIAL MANAGEMENT
Focuses on capital budgeting, decision or investment decision on the acquisition of assets
and its corresponding financing scheme. This area of finance answers the following
questions:
(a)What kind of asset shall be acquired?
(b)What type of financing scheme shall be used in the acquisition of the
asset?
CAPITAL MARKET
An area of business finance that studies the different financial institutions and their
functions that provide assistance to both private and public borrowers of funds. It also
includes the study of the cost of borrowing the funds such as interest and other financing
charges.
FINANCIAL INVESTMENTS
Includes business decisions about the value and price of stocks and bonds, portfolio
analysis, market analysis, security analysis, and behavior of the investors.