Introduction

Welcome to Fundamentals of Finance, a comprehensive learning manual to introduce first year students to the building blocks that form the foundation of the financial world. Whether you are starting a journey towards a career in finance, business or simply looking to understand how the world of finance works, this book is your starting point. At its core, finance is about making decisions under uncertainty. In this book, you will explore different types of financial markets, institutions and instruments and understand the purposes that they serve. You will discover why a dollar today is worth more than a dollar in the future and learn to apply the valuation principle to evaluate debt and equity instruments. You will gain insights into how investors assess the value of their investment. Risk and returns are two inseparable concepts in finance. Understanding the relationship between the two is essential in making informed investment decisions. You will explore different types of risks and how they can be measured. Finally, you will be introduced to the foreign exchange market, an integral part of our global economy. With this book, you are stepping into the fascinating world of finance, equipped with the knowledge to navigate its complexities.