A detailed study on the fundamentals of financial concepts is sure to give some idea on the concepts of finance. The world of investment can be confusing for the investors. The investors need to go through some theories of finance that will help them to understand the behavior of market in a better way.
There are a number of factors that influence the functioning of the investment market. The individual investor’s choice of investment may vary from one person to another. While some investors go for investing in the risky securities, some investors tend to play safe in the market by investing in the less risky securities.
Arbitrage is one of the most important fundamentals of financial concepts. It typically defines the process of taking advantage of the price different between two or more markets. A clear concept on the arbitrage practicing may be beneficial for the investors.
The cash flow is another fundamental of the financial concept that refers to the process of cash being transferred by a business or an organization. Understanding of the cash flow management may be useful to evaluate a particular business or in determining the problems with liquidity.
Money market makes an important part in the concept of finance. Investment in currencies is getting popular with the passage of time. A study on the forex market is crucial for all those who are investing in the money market. The forex market handles the trading of one currency with another country’s currency and it is the largest financial market in the world in terms of transaction volume.
The financial market is always exposed to various risks and pit-falls. The investors need to be well aware to avoid such situations. The various types of risks that come under the domain of financial concepts are – systemic risk, credit risk, consumer credit risk, settlement risk, liquidity risk and market risk.
Last Updated on : 1st July 2013