Finance

Summary: Corporate finance/ public finance/ consumer edit/ money markets/ commodity markets/ securities markets/ banking and insurance There are two main types of finances. Corporate and public finance. Corporate finance Corporate finance is concerned with the capital budgeting decisions of a corporation: the types and proportions of real investments it chooses; the capital structure of the corporation; the financial instruments that are used to finance investment; and the decision of investors and how they affect the rates of returns on assets and therefore the cost of capital to corporations. The discipline can be divided into long-term and short-term decisions and techniques. Capital investment decisions are long-term choices about which projects receive investment, whether to finance that investment with equity or debt, and when or whether to pay dividends to shareholders. On the other hand, the short term decisions can be grouped under the heading "Working capital management". This subject deals with the short-term balance of current assets and current liabilities; the focus here is on managing cash, inventories, and short-term borrowing and lending.

Public finance Public finance is the study of government finance. This includes spending by public bodies, taxation, incomes from government properties, and debt and borrowing. Primary source of government incomes are the taxes.

Tax is a certain amount of money that ou have to pay to the state on the basis of your income or properties. Taxes can be divided into two main groups, direct and indirect taxes. In the first case, direct tax is levied on incomes. The typical direct taxes are: personal income tax; corporate income tax; social insurance contribution. Indirect taxes are levied on services and commodities that the individual buys. The main indirect taxes are value-added tax, local tax, customs duties, consumption tax, gift and inheritance tax, motor vehicle tax. In Hungary the taxation system is self- assessing system, where monthly, quarterly os annual tax return of income has to be made by the taxpayers. The government regularly pusblishes the law of taxation and its modifications from which the taxpayers can get to know about their rights and duties. In Hungary a new type of taxation was introduces on 1th January, 2003. This taxation is the socalled Simplified Taxation for Entrepeneurs (EVA). According to this system, the sole traders do not have to pay their personal income, VAT because EVA substitutes these. Consumer Credit Consumer debt can be defined as money, goods or services provided to an individual instead of payment. Common forms of consumer credit include credit cards, store cards, motor (auto) finance, personal loans (installment loans), retail loans (retail installment loans) and mortgages. Money markets The money market isn't a place. It's the continual buying and selling of short-term liquid investments, including Treasury bills, certificates of deposit (CDs), commercial paper, and other debt issued by corporations and governments. These investments are also known as money market instruments. Money market trades in short-term financial instruments commonly called "paper." This contrasts with the capital market for longer-term funding, which is supplied by bonds and equity. Commodity markets

Commodity markets are markets where raw or primary products are exchanged. These raw commodities are traded on regulated commodities exchanges, in which they are bought and sold in standardized contracts. The trading of commodities consists of direct physical trading and derivatives trading. Certain products, such as wheat, corn, sugar, coffee, cocoa, wool, and metals like silver, gold, cooper, tin, and lead are listed on certain commodity markets. Trading in those commodities is conducted in much the same manner as in stocks. On a commodity exchange there are two markets: spot and futures. A buyer in the spot market usually expects delivery of the commodity, and the seller usually owns the product sold. Securities markets A capital market is a market for securities (debt or equity), where business enterprises (companies) and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year, as the raising of short-term funds takes place on other markets (e.g., the money market). The capital market includes the stock market (equity securities) and the bond market (debt). Banking and insurance Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss. Almost everything can be insured. Just to mention few examples, there are: Car insurance: protects you against financial loss if you have an accident. It is a contract between you and the insurance company. Home insurance: Home insurance provides compensation for damage or destruction of a home from disasters. Health insurance: Dental insurance, like medical insurance, is coverage for individuals to protect them against dental costs. Accident-, sickness-, and unemployment insurance Casualty insurance: Casualty insurance insures against accidents, not necessarily tied to any specific property.

Life insurance: Life insurance provides a monetary benefit to a decedent's family or other designated beneficiary, and may specifically provide for income to an insured person's family, burial, funeral and other final expenses.

Credit insurance: Credit insurance repays some or all of a loan when certain things happen to the borrower such as unemployment, disability, or death.