What Is Finance? Finance is a term for matters regarding the management, creation, and study of money and investments. It involves the use of credit and debt, securities, and investment to finance current projects using future income flows. Because of this temporal aspect, finance is closely linked to the time value of money, interest rates
What Is a Finance Charge? A finance charge is a fee charged for the use of credit or the extension of existing credit. It may be a flat fee or a percentage of borrowings, with percentage-based finance charges being the most common. A finance charge is often an aggregated cost, including the cost of carrying
What Is a Financial Cooperative? A financial cooperative (co-op) is a type of financial institution that is owned and operated by its members. The goal of a financial cooperative is to act on behalf of a unified group to offer traditional banking services. These institutions attempt to differentiate themselves by offering above-average services along with
What Is a Financial Plan? A financial plan is a document that details a person’s current financial circumstances and their short- and long-term monetary goals. It includes strategies to achieve those goals. A financial plan can help you to establish and plan for fundamental needs, such as managing life’s risks (e.g., those involving health or
What Is the Financial Sector? The financial sector is a section of the economy made up of firms and institutions that provide financial services to commercial and retail customers. This sector comprises a broad range of industries including banks, investment companies, insurance companies, and real estate firms. Key Takeaways The financial sector is a section of the economy made
What Is Financial Accounting? Financial accounting is a specific branch of accounting involving a process of recording, summarizing, and reporting the myriad of transactions resulting from business operations over a period of time. These transactions are summarized in the preparation of financial statements, including the balance sheet, income statement and cash flow statement, that record
What Is a Financial Advisor? A financial advisor provides financial advice or guidance to customers for compensation. Financial advisors (sometimes spelled as advisers) can provide many different services, such as investment management, tax planning, and estate planning. Increasingly, financial advisors are acting as a “one-stop-shop” by providing everything from portfolio management to insurance products. Registered
What Is Fee Income? Financial institutions make money in just two ways: by collecting interest on loans and by charging fees on services. Fee income is the revenue taken in from account-related charges. Charges that generate fee income include non-sufficient funds fees, overdraft charges, late fees, over-the-limit fees, wire transfer fees, monthly service charges, and
What Is a Fence (Options)? A fence is a defensive options strategy involving three different options that an investor deploys to protect an owned holding from a price decline, while also sacrificing potential profits. A fence is similar to options strategies known as risk-reversals and collars that involve two, not three options. Key Takeaways A
What Is the Federal Farm Credit System (FFCS)? The Federal Farm Credit System (FFCS) is a network of government programs and financial institutions created to provide financing for agricultural businesses in the United States. The FFCS was created because agricultural businesses often struggle to secure affordable credit through traditional lenders. Through the FFCS, farmers are
