There are three broad areas of finance: business finance, investments, and financial markets and institutions Finance is the study of the trade-off between risk and expected return.

The accounting department creates financial statements, and the finance department implements the firm’s policy objectives, monitors results, and responds to necessary strategic and tactical changes. Finance is responsible for budgeting and forecasting.

business finance — the study and application of how managers can apply financial principles to maximize the value of a firm in a risky environment. investments — one of the three main areas of finance; products and processes used to create individual and institutional portfolios with the intent of growing wealth. financial markets and institutions — one of the three main areas of the field of finance; firms and regulatory agencies that oversee our financial system. commercial paper (CP) — short-term, unsecured financial obligations issued by firms as a means of short-term financing for items such as inventory or payables.