Final answer:
The field of finance divided into three areas includes an area called investments, which deals with the analysis and trading of stocks and bonds, and market analysis. It's essential for investors to analyze risk and return, and understand the dynamic of demand and supply within financial markets.
Step-by-step explanation:
The area of finance that involves decisions concerning stocks and bonds, including security analysis, portfolio theory, and market analysis is investments. When investors choose to put their money into financial assets, they must carefully identify their goals and consider the risk and return associated with their investments. Whether through purchasing stocks, bonds, reinvesting profits, borrowing from banks, or investing with venture capitalists, all these actions fall under the realm of investments and play a crucial role in the functioning of financial markets.
Understanding the shifts in demand and supply in financial markets is also a vital component of making informed investment decisions. For example, when governments or corporations need to raise funds, they might issue bonds, and investors have the opportunity to buy these bonds and potentially earn a return based on the company’s performance. Similarly, individual firms sell shares of stock to raise capital, and financial investors buy and sell these stocks, which are influenced by the overall performance and decisions of the company.