1.1 Defining Finance Finance is the study of how people allocate scarce resources over time costs and benefits are distributed over time but the actual timing and size of future cash flows are often known only probabilistically Examples:saving;mortgage loan;capital budgeting Understanding finance helps you evaluate these uncertain cash flows THE COURSE OF FINANCE 2017 SPRING 111.1 Defining Finance  Finance is the study of how people allocate scarce resources over time  costs and benefits are distributed over time  but the actual timing and size of future cash flows are often known only probabilistically  Examples: saving; mortgage loan; capital budgeting  Understanding finance helps you evaluate these uncertain cash flows THE COURSE OF FINANCE 2017 SPRING •11