theories of finance

Theories of finance explore how people and institutions manage money, investments, and risks. Key concepts include the Time Value of Money, which states that money today is worth more than the same amount in the future due to earning potential. Efficient Market Hypothesis argues that asset prices reflect all available information, making it hard to consistently outperform the market. Behavioral Finance examines how psychology influences financial decisions, often leading to irrational choices. Together, these theories help explain financial behaviors, investment strategies, and market dynamics, guiding both individuals and businesses in making informed economic decisions.