What is Finance?

Finance is a subfield of Economics. It deals with the allocation of wealth through time: the decision of how much to consume today and how much to save or invest for consumption tomorrow. The field is divided into two basic disciplines. Corporate finance, which involves the identification of optimal investment strategies for firms and how they should be financed, and Investments, which deals with the myriad of securities (stocks, bonds, options, etc.) and strategies available to investors to reach their financial goals. Since finance deals with future values, it necessarily deals with the formation of expectations and investor behaviors. A bourgeoning area within the discipline is behavioral finance, which incorporates issues from psychology and the social sciences.