Outline of finance

The following outline is provided as an overview of and topical guide to finance:

Finance – addresses the ways in which individuals and organizations raise and allocate monetary resources over time, taking into account the risks entailed in their projects.

Overview

The word finance may incorporate any of the following:

The study of money and other assets
The management and control of those assets
Profiling and managing project risks

Fundamental financial concepts

Finance
- Arbitrage
- Capital (economics)
- Capital asset pricing model
- Cash flow
- Cash flow matching
- Debt
  - Default
  - Consumer debt
  - Debt consolidation
  - Debt settlement
  - Credit counseling
  - Bankruptcy
  - Debt diet
  - Debt-snowball method
  - Debt of developing countries
- Discounted cash flow
- Financial capital
  - Funding
- Financial modeling
- Entrepreneur
  - Entrepreneurship
- Fixed income analysis
- Gap financing
- Global financial system
- Hedge
  - Basis risk
- Interest rate
  - Risk-free interest rate
  - Term structure of interest rates
- Short rate model
  - Vasicek model
  - Cox–Ingersoll–Ross model
  - Hull–White model
  - Chen model
  - Black–Derman–Toy model
- Interest
  - Effective interest rate
  - Nominal interest rate
  - Interest rate basis
  - Fisher equation
  - Crowding out
  - Annual percentage rate
  - Interest coverage ratio
- Investment
  - Foreign direct investment
  - Gold as an investment
  - Over-investing
- Leverage
- Long (finance)
- Liquidity
- Margin (finance)
- Mark to market
- Market Impact
- Medium of exchange
- Microcredit
- Money
  - Money creation
  - Currency
  - Coin
  - Banknote
  - Counterfeit
  - History of money
  - Monetary reform
- Portfolio
  - Modern portfolio theory
  - Mutual fund separation theorem
  - Post-modern portfolio theory
- Reference rate
  - Reset
- Return
  - Absolute return
  - Investment performance
  - Relative return
- Risk
  - Financial risk
  - Risk management
    - Financial risk management
    - Uncompensated risk
  - Risk measure
- Scenario analysis
- Short (finance)
- Speculation
  - Day trading
- Position trader
- Spread trade
- Standard of deferred payment
- Store of value
- Time horizon
- Time value of money
  - Discounting
  - Present value
  - Future value
  - Net present value
  - Internal rate of return
  - Modified internal rate of return
  - Annuity
  - Perpetuity
- Unit of account
- Volatility
- Yield
- Yield curve

History

History of banking
History of insurance
Tulip mania (Dutch Republic), 1620s/1630s
South Sea Bubble (UK) & Mississippi Company (France), 1710s; see also Stock market bubble
Vix pervenit 1745, on usury and other dishonest profit
Panic of 1837 (US)
Railway Mania (UK), 1840s
Erie War (US), 1860s
Long Depression, 1873–1896 (mainly US and Europe, though other parts of the world were affected)
Post-World War I hyperinflation; see Hyperinflation and Inflation in the Weimar Republic
Wall Street Crash of 1929
Great Depression 1930s
Bretton Woods Accord 1944
1973 oil crisis
1979 energy crisis
Savings and Loan Crisis 1980s
Black Monday 1987
Asian financial crisis 1990s
Dot-com bubble 1995-2001
Stock market downturn of 2002
United States housing bubble
Financial crisis of 2007–08, followed by the Great Recession

Finance terms by field

Accounting (financial record keeping)

Auditing
Accounting software
Book keeping
FASB
Financial accountancy
- Financial statements
Management accounting
Philosophy of Accounting
Working capital

Banking

Anonymous banking
Automatic teller machine
Deposit
Deposit creation multiplier
Ethical banking
International Bank Account Number
Islamic banking
Loan
Withdrawal

Economics and finance

Mathematics and finance

Time value of money

Financial mathematics

Mathematical tools

Probability
- Probability distribution
Stochastic calculus
- Brownian motion
  - Geometric Brownian motion
- Cameron–Martin theorem
- Feynman–Kac formula
- Girsanov's theorem
- Itô's lemma
- Martingale representation theorem
- Radon–Nikodym derivative
- Stochastic differential equations
- Stochastic process
  - Jump process
  - Lévy process
  - Markov process
  - Ornstein–Uhlenbeck process
  - Wiener process
Monte Carlo methods
Partial differential equations
- Finite difference method
- Heat equation
- Numerical partial differential equations
  - Crank–Nicolson method
  - Finite difference method: Numerical analysis
Volatility

Derivatives pricing

Brownian model of financial markets
Martingale pricing
Rational pricing assumptions (See also Fundamental theorem of asset pricing)
- Risk-neutral measure
- Arbitrage-free pricing
Forward contract
- Forward contract pricing
Futures
- Futures contract pricing
Options (incl. Real options and ESOs)
- Black–Scholes formula
  - Approximations for American options
    - Barone-Adesi and Whaley
    - Bjerksund and Stensland
    - Black's approximation
    - Optimal stopping
    - Roll–Geske–Whaley
- Black model
- Binomial options model
- Finite difference methods for option pricing
- Garman–Kohlhagen model
- The Greeks
- Lattice model (finance)
- Margrabe's formula
- Monte Carlo methods for option pricing
  - Monte Carlo methods in finance
  - Quasi-Monte Carlo methods in finance
  - Least Square Monte Carlo for American options
- Trinomial tree
- Volatility
  - Implied volatility
  - Historical volatility
  - Volatility smile (& Volatility surface)
  - Stochastic volatility
  - Local volatility
    - Implied binomial tree
    - Implied trinomial tree
    - Edgeworth binomial tree
Swaps
- Swap valuation
Interest rate derivatives (bond options, swaptions, caps and floors, and others)
- Black model
- Short-rate models (generally applied via lattice based- and specialized simulation-models, although "Black like" formulae exist in some cases.)
  - Rendleman–Bartter model
  - Vasicek model
  - Ho–Lee model
  - Hull–White model
  - Cox–Ingersoll–Ross model
  - Black–Karasinski model
  - Black–Derman–Toy model
  - Kalotay–Williams–Fabozzi model
  - Longstaff–Schwartz model
  - Chen model
- Forward rate-based models (Application as per short-rate models)
  - LIBOR market model (also called: Brace–Gatarek–Musiela Model, BGM)
  - Heath–Jarrow–Morton Model (HJM)
Valuation adjustments
- Credit valuation adjustment
- XVA

Constraint finance

Financial markets

Market and instruments

Capital markets
Securities
Financial markets
Primary market
Initial public offering
Aftermarket
Free market
Bull market
Bear market
Bear market rally
Market maker
Dow Jones Industrial Average
Nasdaq
List of stock exchanges
List of stock market indices
List of corporations by market capitalization
Value Line Composite Index

Equity market

Stock market
Stock
Common stock
Preferred stock
Treasury stock
Equity investment
Index investing
Private Equity
Financial reports and statements
Fundamental analysis
Dividend
Dividend yield
Stock split

Equity valuation

Investment theory

Bond market

Money market

Repurchase agreement
International Money Market
Currency
Exchange rate
International currency codes
Table of historical exchange rates

Commodity market

Commodity
- Asset
- Commodity Futures Trading Commission
- Day trading
- Drawdowns
- Forfaiting
- Fundamental analysis
- Futures contract
- Fungibility
- Gold as an investment
- Hedging
- Jesse Lauriston Livermore
- List of traded commodities
- Ownership equity
- Position trader
- Risk (Futures)
- Seasonal traders
- Seasonal spread trading
- Slippage
- Speculation
- Spread trade
- Technical analysis
  - Breakout
  - Bear market
  - Bottom (technical analysis)
  - Bull market
  - MACD
  - Moving average
  - Open Interest
  - Parabolic SAR
  - Point and figure charts
  - Resistance
  - RSI
  - Stochastic oscillator
  - Stop loss
  - Support
  - Top (technical analysis)
- Trade
- Trend

Derivatives market

Derivative (finance)
(see also Financial mathematics topics; Derivatives pricing)
Underlying instrument

Forward markets and contracts

Forward contract

Futures markets and contracts

Option markets and contracts

Options
- Stock option
  - Box spread
  - Call option
  - Put option
  - Strike price
  - Put–call parity
  - The Greeks
  - Black–Scholes formula
  - Black model
  - Binomial options model
  - Implied volatility
  - Option time value
  - Moneyness
  - Straddle
  - Option style
    - Vanilla option
    - Exotic option
    - Binary option
    - European option
      - Interest rate floor
      - Interest rate cap
    - Bermudan option
    - American option
    - Quanto option
    - Asian option
  - Employee stock option
- Warrants
- Foreign exchange option
- Interest rate options
- Bond options
- Real options
- Options on futures

Swap markets and contracts

Swap (finance)
- Interest rate swap
- Basis swap
- Asset swap
- Forex swap
- Stock swap
- Equity swaps
- Currency swap
- Variance swap

Derivative markets by underlyings

Equity derivatives

Contract for difference (CFD)
Exchange-traded fund (ETF)
- Closed-end fund
- Inverse exchange-traded fund
Equity options
Equity swap
Real estate investment trust (REIT)
Warrants
- Covered warrant

Interest rate derivatives

LIBOR
Forward rate agreement
Interest rate swap
Interest rate cap
Exotic interest rate option
Bond option
Interest rate future
Money market instruments
Range accrual Swaps/Notes/Bonds
In-arrears Swap
Constant maturity swap (CMS) or Constant Treasury Swap (CTS) derivatives (swaps, caps, floors)
Interest rate Swaption
Bermudan swaptions
Cross currency swaptions
Power Reverse Dual Currency note (PRDC or Turbo)
Target redemption note (TARN)
CMS steepener
Snowball
Inverse floater
Strips of Collateralized mortgage obligation
Ratchet caps and floors

Credit derivatives

Foreign exchange derivative

Financial regulation

Designations and accreditation

See also: Professional certification in financial services; Professional certification #Accountancy, auditing and finance; #Education below

Certified Financial Planner
Chartered Financial Analyst
- CFA Institute
Chartered Alternative Investment Analyst
Professional risk manager
Chartered Financial Consultant
Canadian Securities Institute
Independent financial adviser
- Chartered Insurance Institute
Financial risk manager
Chartered Market Technician
Certified Financial Technician

Litigation

Liabilities Subject to Compromise

Fraud

Industry bodies

International Swaps and Derivatives Association
National Association of Securities Dealers

Regulatory bodies

International

European Union

Regulatory bodies by country

United Kingdom

United States

United States legislation

Actuarial topics

Actuarial topics

Asset types

Raising capital

Valuation

Note that this section is corporate-finance-focused; for the valuation of derivatives and interest rate / fixed income instruments see § Derivatives pricing above.

Underlying theory

Value (economics)
Valuation (finance) and specifically #Valuation overview
"The Theory of Investment Value"
Financial economics § Corporate finance theory
Valuation risk
Real versus nominal value (economics)
Real prices and ideal prices
Fair value
- Fair value accounting
Intrinsic value
Market price
Value in use
Fairness opinion
Asset pricing
- Equilibrium price
  - market efficiency
  - economic equilibrium
  - rational expectations
- Arbitrage-free price
  - Rational pricing § Arbitrage free pricing
  - Rational pricing § Risk neutral valuation

Context

(Corporate) Bonds
Equity valuation
- #Equity valuation above
- Fundamental analysis
- Stock valuation
- Business valuation
- Equity (finance) § Market value of equity stock
- Intrinsic value (finance) § Equity
- Capital budgeting and Corporate finance § Investment and project valuation
- Intrinsic value (finance) § Equity
- The Theory of Investment Value
Real estate valuation
- Real estate appraisal
- Real estate economics

Discounted cash flow valuation

Bond valuation
- Modelling
- Results
  - Clean price
  - Dirty price
  - Yield to maturity
  - Coupon yield
  - Current yield
  - Duration
  - Convexity
- Cash flows
  - Principal (finance)
  - Coupon (bond)
  - Fixed rate bond
  - Floating rate note
  - Zero-coupon bond
  - Accrual bond
  - sinking fund provisions
- Considerations
  - covenants and indentures
  - secured / unsecured debt
  - senior / subordinated debt
  - embedded options
    - Pull to par
    - Lattice model (finance) § Hybrid securities (see also #Contingent claim valuation below)
    - effective duration
    - effective convexity

Real estate valuation
- Intrinsic value (finance) § Real estate
- Income approach
  - Net Operating Income
  - Real estate appraisal § The income approach
  - German income approach

Equity valuation
- Results
  - Net present value
  - Adjusted present value
  - Equivalent Annual Cost
  - Payback period
  - Discounted payback period
  - Internal rate of return
  - Modified Internal Rate of Return
  - Return on investment
  - Profitability index
- Considerations
  - Minimum acceptable rate of return
  - Margin of safety (financial)
  - Enterprise value
  - Sum-of-the-parts analysis
  - Minority discount
  - Control premium
  - Accretion/dilution analysis
  - Certainty equivalent
  - Haircut (finance)
- Specific models and approaches
  - Dividend discount model
  - Gordon growth model
  - Market value added / Economic value added
  - Residual Income Valuation
  - First Chicago Method
  - rNPV
  - Fed model
  - Chepakovich valuation model
  - Sum of perpetuities method
  - Benjamin Graham formula
  - LBO valuation model
  - Goldman Sachs asset management factor model
- Modelling
  - Cash flow
    - Cash flow forecasting
    - Cash flow statement
    - Operating cash flow
    - EBIDTA
      - Depreciation § Effect on cash
    - NOPAT
    - Free cash flow
      - Free cash flow to firm
      - Free cash flow to equity
    - Dividends
    - Cash is king
  - Required return (i.e. discount rate)
    - Cost of capital
    - Weighted average cost of capital
    - Cost of equity
    - Cost of debt
    - Capital Asset Pricing Model
      - Beta (finance) § Estimation
    - Arbitrage pricing theory
    - Business valuation § Build-Up Method
    - T-model
      - cash-flow T-model
  - Terminal value
    - Forecast period (finance)
    - long term growth rate
      - Sustainable growth rate § From a financial perspective
      - Stock valuation § Growth rate
  - Forecasted financial statements
    - Financial forecast
    - Financial modeling § Accounting
    - Pro forma § Financial statements
    - Revenue
      - Revenue model
      - Revenue § Financial statement analysis
      - Revenue management § Forecasting
      - Net sales
    - Costs
      - Profit margin
        Gross margin
        
        Net margin
        
        Cost of goods sold
      - Operating expenses
        Operating ratio
      - Cost driver
      - Fixed cost
      - Variable cost
      - Overhead cost
      - Value chain
      - activity based costing
      - common-size analysis
      - Profit model
    - Capital

Relative valuation

Bonds
- Bond valuation § Relative price approach
- Yield spread
  - I-spread
  - Option-adjusted spread
  - Z-spread
  - Asset swap spread
- Credit spread (bond)

Real estate

Equity
- Financial ratio
- Market-based valuation
- Comparable company analysis
- Dividend yield
  - Yield gap
- Return on equity
  - DuPont analysis
- PE ratio
  - PEG ratio
  - Cyclically adjusted price-to-earnings ratio
- P/B ratio
- Price to cash based earnings
- Price to Sales
- EV/EBITDA
- EV/Sales
- Stock image
- Valuation using the Market Penetration Model
- Graham number
- Tobin's q

Contingent claim valuation

Valuation techniques
- general
- as typically employed
Applications
- Corporate investments and projects
- Balance sheet assets and liabilities
  - warrants and other convertible securities
  - securities with embedded options such as callable bonds
  - employee stock options
  - structured finance investments (funding dependent)
  - special purpose entities (funding dependent)

Other approaches

"Fundamentals"-based (relying on accounting information)

Portfolio theory

General concepts

Modern portfolio theory

Portfolio optimization

Theory and results (derivation of the CAPM)
- Equilibrium price
- Market price
- Systematic risk
  - Risk factor (finance)
- Idiosyncratic risk / Specific risk
- Mean-variance analysis (Two-moment decision model)
- Efficient frontier (Mean variance efficiency)
- Feasible set
- Mutual fund separation theorem
  - Separation property (finance)
- Tangent portfolio
- Market portfolio
- Beta (finance)
- Capital allocation line
- Capital market line
- Security characteristic line
- Capital asset pricing model
  - Single-index model
- Security market line
- Roll's critique

Related measures

Optimization models
- Markowitz model
- Treynor–Black model

Equilibrium pricing models (CAPM and extensions)
- Capital asset pricing model (CAPM)
- Consumption-based capital asset pricing model (CCAPM)
- Intertemporal CAPM (ICAPM)
- Single-index model
- Multiple factor models (see Risk factor (finance))

Post-modern portfolio theory

Approaches

Optimization considerations
- Pareto efficiency
- Bayesian efficiency
- Multiple-criteria decision analysis
- Multi-objective optimization
- Stochastic dominance
  - Second-order Stochastic dominance
  - Marginal conditional stochastic dominance
- Downside risk
- Risk parity
- Tail risk parity
- Volatility skewness
- Semivariance
- Expected shortfall (ES; also called conditional value at risk (CVaR), average value at risk (AVaR), expected tail loss (ETL))
- Tail value at risk
- Statistical dispersion
- Discounted maximum loss
- Indifference price

Measures
- Dual-beta
  - Downside beta
  - Upside beta
- Upside potential ratio
- Upside risk
- Downside risk
- Sortino ratio
- Omega ratio
- Bias ratio
- Information ratio
  - Active return
  - Active risk
- Deviation risk measure
- Distortion risk measure
- Spectral risk measure

Optimization models
- Black–Litterman model
- Universal portfolio algorithm

Performance measurement

Performance attribution
- Market timing
- Stock selection
Fixed-income attribution
Benchmark
Lipper average
Returns-based style analysis
Rate of return on a portfolio
Holding period return
Tracking error
Alpha (finance)
Beta (finance)
Simple Dietz method
Modified Dietz method
Modigliani risk-adjusted performance
Upside potential ratio
Maximum Downside Exposure
Maximum drawdown
- Sterling ratio
Sharpe ratio
Treynor ratio
Jensen's alpha
Bias ratio
V2 ratio
Calmar ratio (hedge fund specific)

Mathematical techniques

Quadratic programming
- Critical line method
Nonlinear programming
Mixed integer programming
Stochastic programming (§ Multistage portfolio optimization)
Copula (probability theory) (§ Quantitative finance)
Principal component analysis (§ Quantitative finance)
Deterministic global optimization
Genetic algorithm (List of genetic algorithm applications § Finance and Economics)
Machine learning (§ Applications)

Financial software tools

Straight Through Processing Software
Technical Analysis Software
Fundamental Analysis Software
Algorithmic trading
Electronic trading platform
List of numerical analysis software
Comparison of numerical analysis software

Financial institutions

Bank
- List of banks
  - List of banks in the Arab World
  - List of banks in Africa
  - List of banks in the Americas
  - List of banks in Asia
  - List of banks in Europe
  - List of banks in Oceania
  - List of international banking institutions
- Advising bank
- Central bank
  - List of central banks
- Commercial bank
- Community development bank
- Cooperative bank
- Custodian bank
- Depository bank
- Ethical bank
- Investment bank
- Islamic banking
- Merchant bank
- Microcredit
- Mutual savings bank
- National bank
- Offshore bank
- Private bank
- Savings bank
- Swiss bank
- Bank holding company
Building society
Broker
- Broker-dealer
- Brokerage firm
- Commodity broker
- Insurance broker
- Prime brokerage
- Retail broker
- Stockbroker
Clearing house
Commercial lender
Community development financial institution
Credit rating agency
Credit union
Diversified financial
Edge Act Corporation
Export Credit Agencies
Financial adviser
Financial intermediary
Financial planner
Futures exchange
- List of futures exchanges
Government sponsored enterprise
Hard money lender
Independent financial adviser
Industrial loan company
Insurance company
Investment adviser
Investment company
Investment trust
Large and Complex Financial Institutions
Mutual fund
Non-banking financial company
Savings and loan association
Stock exchange
- List of stock exchanges
Trust company

Education

For the typical finance career path and corresponding education requirements see:
- Financial analyst generally, and esp. #Qualification, discussing various investment, banking, and corporate roles (i.e. financial management, corporate finance, investment banking, securities analysis & valuation, portfolio & investment management, credit analysis, working capital & treasury management; see Financial modeling #Accounting)
- Quantitative analysis (finance) and #Education, specifically re roles in quantitative finance (i.e. derivative pricing & hedging, interest rate modeling, financial risk management, financial engineering, computational finance; also, the mathematically-intensive variant on the banking roles; see Financial modeling #Quantitative finance)
Business education lists undergraduate degrees in business, commerce, accounting and economics - "finance" may be taken as a major in most of these, whereas "quantitative finance" is invariably postgraduate, following a math-focused Bachelors; the most common degrees for (entry level) investment, banking, and corporate roles are:
- Bachelor of Business Administration (BBA)
- Bachelor of Commerce (BCom)
- Bachelor of Accountancy
- Bachelor of Economics
At the postgraduate level, the MBA and MCom, as well the MSM, similarly offer training in finance generally; at this level there are also the following specifically focused masters degrees - see Master of Finance #Comparison with other qualifications for their focus and inter-relation:
- Master of Applied Finance
- Master of Computational Finance
- Master of Finance
- Master of Financial Economics
- Master of Financial Engineering
- Master of Financial Mathematics
- Master of Mathematical Finance
- Master of Quantitative Finance
- Master of Science in Finance
Doctoral-training in finance is usually a requirement for academia, but not relevant to industry
- quants often enter the profession with PhDs in disciplines such as physics, mathematics, engineering, and computer science, and learn finance "on the job”
- as an academic field, finance theory is studied and developed within the disciplines of management, (financial) economics, accountancy and applied mathematics.
There are various Professional Certifications in financial services relating to specialized roles (see #Designations and accreditation above); the best known are arguably:
- Association of Corporate Treasurers (MCT / FCT)
- Certificate in Quantitative Finance (CQF)
- Certified Financial Planner (CFP)
- Certified International Investment Analyst (CIIA)
- Certified Treasury Professional (CTP)
- Chartered Alternative Investment Analyst (CAIA)
- Chartered Financial Analyst (CFA)
- Financial Risk Manager (FRM)
- Professional Risk Manager (PRM)
See also qualifications in related fields:

Related lists

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External links

Wharton Finance Knowledge Project – finance knowledge for students, teachers, and self-learners.
Prof. Aswath Damodaran - financial theory, with a focus in Corporate Finance, Valuation and Investments. Updated Data, Excel Spreadsheets.
Web Sites for Discerning Finance Students (Prof. John M. Wachowicz) -Links to finance web sites, grouped by topic
studyfinance.com - introductory finance web site at the University of Arizona
BF gallery - introductory articles, full glossary and links to resources on behavioral finance
SECLaw.com - law of the financial markets
TheStreet.com Glossary - stock market related definitions

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