Finance is the study of the management of money. Firms and individuals seek to maintain liquidity in the short run (avoid running out of money) and to invest in the long-run to create value. Good financial decisions over time are critical to individuals, firms, and governments in achieving their goals. Finance uses tools including economic theory, accounting measurements, mathematical and statistical methods, data, and specialized knowledge of financial products, processes and markets to facilitate these financial decisions.
The creation of value involves making investments in the present to obtain a return in the future where the future is uncertain. The promised return is often proportional to the risk undertaken. The focus in the finance curriculum is risk analysis and risk management. Understanding the risk the firm is taking is important to a corporate financial manager. Understanding the markets, and the instruments that trade in them is important in assessing risk for an investor. Recent crises in the domestic and global financial markets demonstrate the impact of poor financial decisions by some individuals, firms, and financial institutions. The faculty seek to alert students to such risk, measure risk exposures and develop tools to manage the risks.