FINANCE, AN EXCITING CAREER
School of Business, LeTourneau University
Dr. Castro
I have been asked by potential finance students some questions about finance such as what finance
is and the difference between finance and accounting.
Accounting: Accountant’s (sometimes called: Controller) primary function is to develop and provide data
measuring the performance of the firm, assessing its financial position, and paying taxes. The accountant
is responsible for preparing financial statements such as the income statement, balance sheets, and cash
flows. It is normally passive work, in the sense that, the work has a very independent nature to it such as
preparing forms and financial statements. It is a good job for people who want to work independently and
are very organized (this is only a very brief description, if you are interested in accounting, consult your
accounting instructor for more information).
Finance: The financial manager or consultant places primary emphasis on decision making. It uses the
financial statements prepared by accountants to make decisions about the firm’s financial condition and to
advise others about possible losses and profits. In some cases, finance is more a type of leadership
position. A financial manager has to deal not only with finance, but also with economics, accounting,
statistics, math, and management. For example, people working with stocks and bonds have to understand
and analyze how the underlying companies are performing. How a given company is going to perform
during recession? Should they sell or buy stocks or bonds. How a decrease in the interest rate in England
may affect the projects a company has in that country. Finance also deals a lot with risk. Derivative
securities (options, futures, swaps, etc) are used to hedge against possible increase in risk. Risk managers
are in great demand everywhere. Most finance majors find jobs in banks and other financial institutions,
government, real estate, consultant companies, insurance, investment companies, stock market exchanges,
fundraising, and any firm that needs someone to make financial decisions.
Description of Finance
Students will find the major in Finance particularly well-suited for careers in commercial and investment
banking, real estate, corporate control and treasury functions, and insurance organizations. In addition,
finance is important for generalists seeking careers in organization planning, management consulting,
general line management, and small business management. Students seeking careers in the industries of
health care, public and nonprofit management will also benefit from a strong knowledge of finance.
Analytical finance such as risk management, investment, and derivative securities provide a more
rigorous understanding of financial modeling, the theory and tools that underlie modern financial practice
(derivative finance is sometimes called Financial Engineering.). International finance provides the
quantitative and analytical foundation for a career in financial analysis, with an emphasis on the
international aspects and economic foundations of financial theory and practice. A thorough
understanding of the theory of financial markets is combined with institutional detail, hands-on
experience with financial analysis, and familiarity with financial applications.
What courses to take depends a lot on your own background, interests, experience, strengths, and
weaknesses. Having taken the finance core will leave you with a solid understanding of the key
building blocks of real-world finance. The other core courses are crucial elements of this
foundation. Firm valuation, corporate finance, investment banking, and most sell-side jobs require
a real knowledge of GAAP accounting. Asset pricing, portfolio allocation, and risk management
are impossible without a real knowledge of economics and basic statistics. Furthermore, your in
depth exposure to international finance give you a comparative advantage (maybe even an
absolute advantage) in understanding today's trends, tomorrow's changes, and -- in particular -- the
impact of exchange rates -- that is, the "international" in international finance. Going beyond the
core, applications and the more practical and more specialized courses give you exposure to realworld experiences and a breadth of experiences. Business courses are particularly relevant for
integrating your finance knowledge into the decisions of the firm -- finance is a crucial business
input and firms are a key financial environment. Everything is tied together.
I obtained the following information from the Internet
Banking Investment, Commercial, and Insurance and Real Estate
Main Activities:
Valuation and company/segment analysis for mergers, spin-offs,
acquisitions, LBO's, and so forth.
Issuance and placement of securities such as loans, bonds, and equity
including corporate valuation, due diligence, credit analysis, security
design, and security valuation.
Risk management including security sales and structuring, client
advising, derivatives valuation, exposure determination (say to foreign
exchange fluctuations), VAR, and portfolio allocation.
Research/Strategy/Analysis of sectors, macro-trends, regions, or firms in
support of the above activities.
Consulting (Strategic/Valuation)
Main Financial Activities:
Project, business-line, market, and/or financial advice which all center
around valuation exercises designed to help the client make better decisions.
Management Consulting (and General Management)
Main Financial Activities:
Internal financing decisions involving the allocation of capital as above,
but also decisions on the capital structure and the raising of additional
capital, as well as in the overall allocation of risk.
Money Management -- "buy side", because you buy securities
Main Financial Activities:
Security valuation, risk/return measurement, and portfolio allocation.
Risk management in support of the above.
Research/Strategy/Analysis in support of the above.
Sales and Trading -- "sell side" because you sell securities
Main Financial Activities:
Same as above. "Trading" typically is for the firm's own account and in
support of their role of making a market in that security. "Sales" is what it
sounds like, except that the product is often structured in response to the
client's needs. Sales often requires maintaining client relations.
Entrepreneur/Venture Capital
Main Financial Activities:
Valuation of firm, business line, and market.
Fund raising.
International Capital Markets and Banking
Cases in International Finance, International Banking, Foreign Exchange Markets, Credit
Analysis, Country Risk Analysis, National Financial Markets and Capital Flows
Corporate Finance and Valuation
Creating and Managing Value, Financial Strategies, Mergers and Acquisitions, Topics in
Financial Engineering, Financial Innovation and Structured Finance, Managerial
Accounting, Options and Derivatives, Financial Modeling, Mergers and Acquisitions Law,
Competitive Strategy, Alliance Strategy
Risk Management
Computer Simulations and Risk Assessment, Credit Analysis, Country Risk Analysis,
Options and Derivatives, Financial Modeling
Buy Side and Trading
Options and Derivatives, International Portfolio Management, Fixed Income Securities,
Hedge Fund Management, Foreign Exchange Markets
Sales
Transnational Negotiations, Financial Product Marketing, Options and Derivatives, Fixed
Income Securities, Foreign Exchange Markets, Topics in Financial Engineering