...Financial Terms 1. Finance: Finance is the science of the management of money and other assets. This is essential for businesses with importance to capital and holdings. (Titman, Keown, & Martin, 2011) 2. Efficient Market: Efficient market is defined as a price where the holdings show both current as well as relevant figures; the assets fundamentally have their actual prices. The affiliation to finance is that the statement of information efficiency is operating in asset management with respect to their assessments. 3. Primary Market: Primary market is defined as a market relating to new securities where the securities are sold first (Titman, Keown, & Martin, 2011) . The securities are directly purchased from the issuer. This is important in finance ability as an importance of the fact that the growth of long-term capital through the issuance of securities is a necessary issue in finance. 4. Secondary Market: Secondary market is defined as where securities are traded that has earlier been issued within the primary market (Titman, Keown, & Martin, 2011). Usually, the securities are issued in either public offering or private. This is necessary within finance because these markets provide liquidity to stake holders. 5. Risk: Risk is defined as a possibility when the investment might potentially be unsuccessful to receive the expected returns, which may result in the loss of the original investment. It is very important within finance to assess risk so that...
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...Campus Michael Charley FIN 370 – Finance for Business December 8, 2010 Instructor: Deepak A. Patel Finance is to apply for a credit loan to finance a home, car, and business, from a Bank when funds are needed for this type of huge purchase * Efficient market- Profit driven individuals that act on their own; where all assets, securities reflect any and all available public information at any instant in time; Investors also make sure the price reflects appropriately the expected earnings and the risks that are involved as well as the value of the firm Role in Finance- When the information that investors need to make investment decisions is widely available, thoroughly analyzed, and regularly used, the result is an efficient market. This is the case with securities traded on the major US stock markets. That means the price of a security is a clear indication of its value at the time it is traded. Conversely, an inefficient market is one in which there is limited information available for making rational investment decisions and limited trading volume. * Primary market- When new trades are put on the market that have not been sold or traded to investors. Role in Finance- Primary markets enable firms to raise capital through the sale of financial assets. Businesses are able to access potential investors that are outside its immediate influence. Businesses have to meet stringent market standards to issue securities at the primary market. The added scrutiny makes the...
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...Capital Market the market, or realistically, the group of interrelated markets, in which capital in financial form is lent or borrowed for medium and long term and, in cases such as equities, for unspecified periods. The capital markets, in distinction from other parts of the financial market ie, the money markets, are those for long-term government securities, corporate bonds, stocks, municipal bonds issued by state and local government units, and mortgages. industry and commerce as well as government and local authorities raise capital from the capital market which performs several important functions in the process of economic development. Most important among them are the promotion of savings and investment and efficient allocation of funds among competing uses. Participants in the capital markets are many. They include the commercial banks, saving and loan associations, credit unions, mutual saving banks, finance houses, finance companies, merchant bankers, discount houses, venture capital companies, leasing companies, investment banks, investment companies, investment clubs, pension funds, stock exchanges, security companies, underwriters, portfolio-managers, and insurance companies. Capital market in Bengal was founded during the Mughal regime in the early 17th century. Although in a limited scale, there were money and capital market activities in Suba-e-Bangala throughout the 17th century. Bengal under the nawabs was fairly developed in trade and communication. An historian...
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...Defining Financial Terms 1. Finance: Finance means the dealing of providing funds and capital for earnings. In addition it includes getting money for a particular reason. This is a vital act because of the fact that it involves the administration of both capital as well as holdings. 2. Efficient Market: This is a place where the price of holdings proves both current as well as relevant figures; the assets fundamentally have their actual prices. The relationship to finance is that the statement of information effectiveness is utilized in asset management with respect to their valuation. 3. Primary Market: This is the market relating to new securities where the securities are sold first. The securities are directly purchased from the issuer. This is significant in a finance capacity as a consequence of the fact that the growth of long-term capital through the issuance of securities is an essential issue in finance. 4. Secondary Market: This is a place where refuges are traded that has earlier been issued within the primary market. Usually, the securities are issued in either public offering or private. This is essential within finance because these markets provide liquidity to stake holders. 5. Risk: Prospect is there that the investment might possibly be unsuccessful to receive the projected returns, that may subsequently result in the loss of the original investment. It is fundamental within finance to assess risk so that the possibility of not receiving...
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...their roles in finance. Finance: Finance or financing is the study of how people/businesses evaluate investments, raising money for the investments. Finance is a broad word with many facets. When reading the chapters I recognize finance as a learned talent. Knowing when to invest, strive ahead, or taking a chance. Business finance can be divided into three divisions; capital budget, capital structures, and working capital management. It is the management of money and the management information and how information is interpreted, both personally and in business. Efficient market: “Market where all pertinent information is available to all participants at the same time, and where prices respond immediately to available information. Stock markets are considered the best examples of efficient markets” (Business Dictionary, 2013 p. 1.) · Primary Market: A market that issues new securities on an exchange. Companies, governments and other groups obtain financing through debt or equity based securities. Primary markets are facilitated by underwriting groups, which consist of investment banks that will set a beginning price range for a given security and then oversee its sale directly to investors. Secondary Market: A market where investors purchase securities or assets from other investors, rather than from issuing companies themselves. The national exchanges - such as the New York Stock Exchange and the NASDAQ are secondary markets. Secondary markets exist for other...
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...Definitions for Finance FIN/370 February 24, 2014 Finance Definitions Finance – Is the study of people and business invest and raise capital to fund them. It is the study of how it addresses the following: 1. What long-term investments should the firm undertake?This area of finance is generally referred to as capital budgeting. 0 2. How should the firm raise money to fund these investments?The firm’s funding choices are generally referred to as capital structure decisions. 3. How can the firm best manage its cash flows as they arise in its day-to-day operations?This area of finance is generally referred to as working capital management. The principle of finance is the following: Principle 1: Money Has a Time Value A dollar received today is worth more than a dollar received in the future. Conversely, a dollar received in the future is worth less than a dollar received today. Principle 2: There Is a Risk-Return Tradeoff We won’t take on additional risk unless we expect to be compensated with additional return. Principle 3: Cash Flows Are the Source of Value Cash flow measures the amount of cash that can actually be taken...
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...1.0 Introduction Capital markets are a major source of finance for large companies engaging in investment projects. Successful investment projects can bring tremendous returns to shareholders in the form of dividend payment and increased share value. However, the source of finance affects a company’s overall cost of capital and by extension its dividends to shareholders. This report addresses the importance of the capital market and the efficient market hypothesis theories. The various source of finance available to large companies and the related cost. As well as the importance of the dividend decision and its possible affect on the company’s share price. [pic] 2.0 The role and importance of capital markets and efficient market hypothesis (EMH) [pic] The Role and Importance of Capital Markets A capital market is a market for the trading of long term securities such as, but not limited to debt and equity securities. A capital market which includes bond markets and stock exchanges serves two major functions. Firstly, it acts as a primary market for issuing new equity and debt capital. This means that companies[1] who want to raise new financing for investment projects or business expansion can source funding via this market. Secondly, it also acts as a secondary market for trading (that is to say buying and selling) of existing securities. The secondary market also serves as a source of pricing information for the primary market. Capital markets provide important...
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...Finance Finance is can sometimes be broken down into three categories: public finance, corporate finance, and personal finance. Finance describes the management, study of money, banking, credit, investment, assets and liabilities. Efficient Market The efficient market was created in 1970 in which the theory of efficient market hypothesis (EMH) stated that an investor cannot outperform the market. Meaning that, in finance, the EMH asserts that the markets are efficient with information. Primary Market The primary markets are enabled by underwriting companies, consisting of investment banks. These banks set the price for the security and then oversee the sale to the investor. In the primary market, the issuing company receives cash proceeds from sales, and in turn uses those proceeds to operate or expand the business. Secondary Market The secondary market is where investors buy a security from another investor rather than the issuing company. The secondary market is where the majority of the exchange in the market takes place on a daily basis. Risk Risk is how the investor evaluates the investment. For finance, the great the risk of the investment generally means the greater the expected return. Security A security is issued by a business to show proof of their debt or equity. Stock Stock is equity capital that comes from the sale of shares. In finance, part of a corporation’s equity capital is comprised of shares that are fully paid. ...
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...Finance- decision making for common wealth. The role of finance plays a function in every aspect of all individual’s life and circumstance for the purpose of gaining financially. Efficient Market- A market in which the values of securities at any instant in time fully reflect all available information, which results in the market value and the intrinsic value being the same. The role efficient market plays in finance is to understand what causes stocks to change in price, as well as how securities such as bonds and stocks are valued or priced in the financial markets, it is necessary to have an understanding of the concept of efficient markets. Primary Market- Transactions in securities offered for the first time to potential investors. The role primary market plays in finance is facilitates capital growth by enabling individuals to convert savings into investments. Secondary Market- The market in which stock previously issued by the firm trades. The role secondary market plays in finance is it allows for the buyer to resale, instead of letting the investment go to waste. Risk- The likely variability associated with expected revenue or income streams. The role risk plays in finance is the risk varies and has to known in order for an investment to be made for future returns. Security- Stocks, bonds, and debts that a corporation uses to raise funds. The role security plays in finance is necessary in order to acquire capital in a corporation. Stock-...
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...Long-term Finance and Economic Growth Working Group on Long-term Finance The views expressed in this report are those of the Working Group on Long-term Finance and do not necessarily represent the views of the individual members of the Group of Thirty. ISBN 1-56708-160-6 Copies of this paper are available for $49 from: The Group of Thirty 1726 M Street, N.W., Suite 200 Washington, D.C. 20036 Tel.: (202) 331-2472 E-mail: info@group30.org; www.group30.org Long-term Finance and Economic Growth Published by Group of Thirty© Washington, D.C. 2013 Table of Contents Abbreviations ............................................................................................................................................................................... 5 Glossary .............................................................................................................................................................................................6 Foreword ..........................................................................................................................................................................................8 Acknowledgments ..................................................................................................................................................................10 Working Group on Long-term Finance ................................................................................................................
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...370 October 28, 2011 Ruth Smith Finance- "Is the study of how people and businesses evaluate investments and raise capital to fund them" (Titman, Martin & Keown, 2011, p. 4). "The science that describes the management, creation and study of money, banking, credit, investments, assets and liabilities. Finance consists of financial systems, to include the public, private and government spaces, and the study of finance and financial instrument" (Investopedia, n.d., para. 1). "While finance is primarily about the management of money, a key component of finance is the management and interpretation of information" (Titman, Martin & Keown, 2011, p. 5). Finance role in finance is to help businesses understand how to make their money work for them and build on that. Also, how to protect their assets. Efficient market- "An investment theory that states it is impossible to "beat the market" because stock market efficiency causes existing share prices to always incorporate and reflect all relevant information. According to the EMH, stocks always trade at their fair value on stock exchanges, making it impossible for investors to either purchase undervalued stocks or sell stocks for inflated prices" ( Investopedia, n.d., para. 1). Stock markets are an example of an efficient market. The role of an efficient market is when investors have the most current information to make the best choice at the present to make investments. Primary market- "New securities are bought and sold...
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...University of Phoenix June 6, 2013 FIN/370 – Finance for Business Resource: Financial Management Create a list of definitions for the following terms and identify their roles in finance. See instructor policy for detailed directions. • Finance Finance is the study of how people and businesses manage and invest their money. The study of finance is the management and interpretation of information during the management of money. The study of finance helps firms address three basic questions regarding investments and cash flow. These are the following: 1.) what long-term investments the firm undertakes? 2.) How should the firm raise money to fund these investments? 3.) How can the firm best manage its cash flows as they arise in its day-to-day operations? (Titman, Keown, & Martin, Chapter 1, 2012). • Efficient market Efficient market is a market whose prices quickly respond to the announcement of new information (Titman, Keown, & Martin, Chapter 1, 2012). The stock market is an example of an efficient market. • Primary market Primary market is a part of the financial market where new security issues are initially bought and sold. In this market, firms receive money raised in the selling of their securities. They issue new securities to raise money that they can then use to help finance their businesses (Titman, Keown, & Martin, Chapter 2, 2012). * Secondary market Secondary market is the financial market where previously issued securities such as...
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...October 19, 2012 FIN 370 Amy Grover In finance there are many terms that one has to know and understand in order to know what to do. Some terms are more important than others and some you need to know in order to have an understanding of the basics of finance. Some of the important terms are finance, efficient market, primary market, secondary market, risk, security, stock, bonds, capital, debit, yield, return on investment, and cash flow. If you want to be in the business work of finance, or in the business world in general one must know and come to understand these terms. Finance According to dictionary.com finance is the management of revenues; the conduct or transaction of money matters generally, especially those affecting the public, as in the fields of banking and investment. Finance in general is how companies and people manage their money. ("Dictionary", n.d.). Efficient Market According to investopedia market efficiency championed in the efficient market hypothesis (EMH) formulated on a particular stock and or bond market. Thus, according to the EMH, no investor has an advantage in predicting a return on a stock price because no one has access to information not already available to everyone else. ("Investopedia", 2012). Primary Market Investopedia defines primary market as a market that issues new securities on an exchange. Underwriting groups, which consist of investment banks that will set a beginning price range for a given security...
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...October 19, 2012 FIN 370 Amy Grover In finance there are many terms that one has to know and understand in order to know what to do. Some terms are more important than others and some you need to know in order to have an understanding of the basics of finance. Some of the important terms are finance, efficient market, primary market, secondary market, risk, security, stock, bonds, capital, debit, yield, return on investment, and cash flow. If you want to be in the business work of finance, or in the business world in general one must know and come to understand these terms. Finance According to dictionary.com finance is the management of revenues; the conduct or transaction of money matters generally, especially those affecting the public, as in the fields of banking and investment. Finance in general is how companies and people manage their money. ("Dictionary", n.d.). Efficient Market According to investopedia market efficiency championed in the efficient market hypothesis (EMH) formulated on a particular stock and or bond market. Thus, according to the EMH, no investor has an advantage in predicting a return on a stock price because no one has access to information not already available to everyone else. ("Investopedia", 2012). Primary Market Investopedia defines primary market as a market that issues new securities on an exchange. Underwriting groups, which consist of investment banks that will set a beginning price range for a given security...
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...existing financial system in Bangladesh to cater to financing needs of SMEs or new potential entrepreneurs and a proposal has been given to develop the venture capital industry to meet financing and non-financing needs of SMEs. SMEs play a vital role within Bangladesh’s economy in terms of creation of industrial outputs and generation of employment. Even though they play a significant role they face problems in securing investment or manage finance to develop their ideas or to expand their existing business. It is not possible for Bangladesh to accelerate economic growth without catering to the financing needs of SMEs, Thus, the paper proposes the development of the venture capital industry as an additional financial intermediary to Cater to financing and non-financing needs of SMEs. The paper discusses available sources of finance for SMEs and the Constraints of these sources. There are basically three sources from which SMEs may receive finance. These are banks, non-government organizations (NGOs) and the capital market. Then, we discuss the advantages that venture capitalists have over banks in catering to the funding needs of SMEs. It is argued that venture capitalists perform the role of ‘active investors’ by way of offering both financial and non-financial commitment to the investee company, which is essential in a market characterized by a high level of uncertainties. Also, it is argued that venture capitalists can reduce the transaction costs associated with monitoring as they...
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