(1) Finance is basically the methodology of allocating financial resources, with a financial value, in an optimal manner to maximize the wealth/capital generation and preservation of a business enterprise or individual. This usually requires the services of a Financial Intermediary. If an individual or company would like to maximize their finances in terms of capital returns through investments using various financial intermediaries, a complex mix of various investment instruments is needed. This type of financial activity also promotes the overall development of any one economy.

(2) International finance is concerned with the same methodology of allocating financial resources, but with modifications or areas of emphasis required by the restrictions of currency and capital movements among countries and the differences in the currencies used in different countries. Foreign capital budgeting requires the use of foreign cash flows and local tax rates, but U.S. inflation rates and U.S. dollars at the current exchange rates can be used. The required return or cost of capital then need only be adjusted, as with any investment, for the greater or lesser risk of the project in which the investment is made, which includes the greater or lesser risk of the country in which the investment is being made. Foreign capital markets are a source for both debt and equity funds, for both foreign subsidiary operations and the general needs of the overall business. Foreign subsidiary capital structures often utilize more local debt when legally and practically available in order to reduce the risk of blockages of earned funds from repatriation to the parent company in another country. In addition, local-currency debt reduces the risk for the parent company if the exchange rates for the local currency change adversely.