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A finance degree can prepare you for a variety of careers in the business world. But what do finance majors actually study?
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Introduction to finance
Finance is a field of study that reveals how individuals, businesses, and organizations raise and spend money. It falls under the umbrella of economics but has its own set of specialized theories, problems, and tools. The introduction to finance course is an ideal starting point for students who want to develop this expertise.
In the first part of the course, students are introduced to the fundamental concepts of financial accounting, which forms the basis for analyzing and understanding financial statements. This background is essential for understanding how businesses generate and use cash flow to make decisions about investments, operations, and financing.
The second part of the course focuses on financial management, which encompasses all aspects of planning, organizing, and directing a company’s financial resources in order to achieve its strategic objectives. Students learn about different types of financial institutions and markets, as well as the principles of corporate finance and capital budgeting. They also gain skills in financial analysis and forecasting that can be applied to real-world scenarios.
Financial accounting
Financial accounting is the branch of accounting that deals with the preparation of financial statements for entities such as businesses and corporations. Financial accounting produces annual reports showing a company’s financial position, including income statements, balance sheets, and cash flow statements.
Managerial accounting
Managerial accounting is the process of providing financial information to managers so that they can make decisions about how to run their businesses. Finance majors who want to work in managerial accounting typically take courses in financial accounting, cost accounting, managerially oriented accounting and auditing, tax accounting, and finance.
Finance theory
Finance theory is the study of financial decision making. Topics covered in a finance theory class can include the time value of money, risk and return, capital budgeting, and investment portfolio management. Finance theory is usually taught at the college level as part of a business or economics degree program.
Financial markets and institutions
A finance major studies the flow of funds within financial markets and institutions. The main focus is on the investment process and how capital is allocated within an economy. The goal is to learn how to manage financial resources in a way that maximizes return and minimizes risk.
Finance majors take courses in micro- and macroeconomics, accounting, statistics, and math. They also study financial markets and institutions, corporate finance, investments, and risk management.
Investments
Investments are a common topic of study for finance majors. This focus area introduces students to the principles of investing, including the basic types of investment vehicles and how they work. Students learn about the factors that influence investment decisions, such as risk tolerance and time horizon, and how to use this information to develop an investment strategy. The coursework also covers the impact of taxes on investments and the role of financial intermediaries in the investment process.
Corporate finance
Corporate finance is the study of how businesses raise and use capital to fund their operations. This includes decisions about issuing new equity, borrowing money, investing in other businesses, and managing cash flow. Corporate finance majors learn how to value companies and assess investment opportunities. They also develop skills in financial modeling, risk management, and strategic planning.
International finance
What do finance majors study? International finance, which is the study of financial systems and institutions around the world. This can include topics like financial markets, banking, and economic policy.
Portfolio management
Finance majors study a variety of topics related to money management, financial planning, and investing. One of the most important topics for finance majors is portfolio management. Portfolio managers are responsible for creating and managing investment portfolios for individuals, businesses, and organizations. They use their knowledge of financial markets and investment products to make decisions about what to buy and sell in order to maximize returns.
Portfolio management is a complex process that requires a deep understanding of financial markets and investments. Finance majors who want to become portfolio managers typically take courses in investment analysis, portfolio theory, and risk management.
Risk management
Risk management is the process of identifying, assessing and controlling risks to an organization. It includes financial risks, such as market and credit risk, as well as operational risks, such as technology and reputation risk.
Finance majors who want to work in risk management typically start their careers in entry-level positions in financial analysis or credit analysis. With experience, they may move into positions with more responsibility, such as portfolio manager or risk analyst. Some finance majors who pursue graduate degrees in business or economics may eventually become chief risk officers or chief financial officers.
