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Finance Terms Wk 1

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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- A shareholders equity. The role stock plays in finance are a need for capital gain for investors.
Bond- A type of debt or a long-term promissory note, issued by the borrower, promising to pay its holder a predetermined and fixed amount of interest each year. Bonds are used to finance different activities and projects in a firm.

Capital - assets of a corporation. Capital is a

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