...• Finance- Is the study of investment evaluation and how people and business raise capital to fund their projects. It involves the payment or receipt of money in the future. • Efficient market-Is a market where all information is available to participants and prices respond to that information. Stock markets are considered efficient markets, and corporations use them to raise capital for the firm. • Primary market-Is the market in which securities are bought and sold for the first time. Corporations use the primary market to raise money for the firm. Generally, the transaction is facilitated by an underwriter (bank, or financial institution). • Secondary market-Is the market in which securities previously issued are transferred from one owner to another. In this market, transactions take place face to face (organized securities exchange), or over the counter (phone or internet). • Risk-Is the potential of loss generated from a given action. Firms study and evaluate their potential risk before incurring in a determined activity. Usually a higher risk financial activity brings higher returns, and low risk financial activities bring lower returns. • Security- Is a negotiable financial instrument for investors and borrowers. There are two types of security: Debt securities (notes and bonds); and equity securities (common and preferred stock). • Stock-Is a form of security that provides ownership in the form of dividends and capital appreciation of the stock. Firms use common...
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...Financial Terms and Roles Joy Cobb 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...
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...Financial Terms and Roles Joy Cobb 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...
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...Terms and Roles of Finance Bonnie Espanol FIN/370 January 13, 2014 Richard Putnam Terms and Roles of Finance • Finance Finance is the study of how organizations and people handle concerns associated with money and the markets and how to generate a profit in the future. The role of finance is essentially about the management and analysis of information about money and how to manage money for an organization. • Efficient market Efficient market is described as a market whose prices immediately respond to new information is announced to all contributors involved. The role of efficient market is to attempt to efficiently provide information publicly and accurately with market prices. • Primary market The primary market is the market is where new securities are sold as to generate money for the first time. The role of the primary market is selling securities and actually receive the cash that was obtained. • Secondary market The secondary market is where all trading previous issued securities or other assets occur. The role of the secondary market is to allow on investor to another sell or buy securities instead of the company itself. • Risk Risk is defined as any negative incidence that is started by external or internal weaknesses or the hesitation involving an investment to a company or shareholders. The role of risk is a preventative action to avoid any loss. • Security The term for security is notable financial claim that shows ownership that has...
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...Defining Financial Terms Mark Wooldridge FIN 370 January 23, 2013 Dr. David Di Sciascio • Finance: The study of how people and businesses evaluate investments and raise capital to fund them. Within in all aspects of business such as management, marketing and production these areas of a company need to understand the aspects that finance has on their areas. • Efficient market: the indication that the worth or price of stocks or alternative investment in an organization are precisely displayed and are accurate account of the value of the investment. • Primary market: A market that is new looking to obtain funds and securities to fund the new company. • Secondary market: A market where securities and funds have already been setup. In this market the securities are being transferred from one investor to another. • Risk: measurable prospect of the loss that investors can take when purchasing securities. • Security: is a negotiable instrument that represents a financial claim. The securities can take the form of a stock, a bond or a debt agreement. • Stock: Where a publically traded company that sells equity within their organization to the public. In modest terms means that the stockholder is actually a partial owner of the company. • Bond: is in term like a long term loan issued by companies to investors where over time the company pays a fixed interest rate to the holder over the life time of the bond that was issued. • Capital: In the aspect of Finance represents the money...
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...Ashley W. Heard February 4, 2013 1. Finance is the capital that is invested in people or business. 2. Efficient market is a market where the participants are able to receive information immediately. The information is available at the same time. 3. Primary market is where securities are bought and sold. 4. Secondary Markets are previously sold stocks and bonds are available for resale. 5. Risk in finances is taken by shareholders who invest money in a company that has debt. 6. Security is an instrument that has a value placed on it. 7. Stock is a security that shows ownership in corporation. 8. Bond is a promissory note that is given by a borrower stating they will pay the interest for a long period of time. 9. Capital is the financial assets 10. Debt is repayment of money borrowed. 11. Yield is the return of an investment 12. Rate of Return a percentage of the total amount invested 13. Return of Investment is the yearly income provided. 14. Cash Flow is the company financial well being. The roles they play in finance: 1. Transfer of money 2. Stock markets 3. Public sector funding programs 4. Stock exchange and brokerage firms 5.Buying stocks from a company with debt, Bank loaning money to a new business 6. Corporation assets and earnings 7. Company security such as ownership of a business, ownership of patents 8. Treasuries, municipal bonds, callable bonds 9. Cash 10.Loans, Mortgage (company), salaries ...
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...University of Texas at Dallas Jindal School of Management FIN4300 Problem Set #3 Fall 2014 Important note: Please submit paper copy of your solutions Due Dates: Dec. 8 for Section 002 and Section 501; Dec. 9 for Section 001 (all in-class) 1. Suppose you are a portfolio manager at Paulson & Co. Inc. Today is the last day of April 2013. Your portfolio did not do well in the most recent month. After learning about the post earnings announcement drift, you decide to give it a try. You gather most recent earnings information on 100 stocks as of April 30 2013. After examining the earnings surprises, you decide to buy an equally weighted portfolio of the top 10 stocks with the most positive earnings surprises. At the same time, you decide to short sell an equally weighted portfolio of the bottom 10 stocks with the most negative earnings surprises. Suppose the dollar amount for both the long and short is based on $10 million. The data for this exercise is included in the excel file SUE final q3.xlsx. (a) Suppose you hold your portfolios for one quarter (from May 1, 2013 to July 31, 2013). What is the return from your long-portfolio? What is the return from your short-portfolio? What is the return from the combined long-short portfolios? (b) Given the return you find from the above exercise, is it consistent with efficient market hypothesis? If yes, state the reason; if not, which form of EMH is violated and why? 2. (a) Many traders claim to observe patterns in stock...
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...Homework #1 1. Suppose you hire a real estate agent and tell him to sell your house to the highest bidder. You pay the real estate agent a flat fee of $50,000 when the house is sold. You learn that, unfortunately, the agent sells the house to the first bidder at a low price. a. What is this type of problem called? b. What is one way to change the real estate agent’s incentive so he does sell to the highest bidder, instead of to the first one? a. This type of problem is known as an agency problem b. One way to change the real estate agent’s incentive so that he is motivated to find the highest bidder is instead of paying him a flat fee of $50,000 you offer him a commission that pays him a percentage of the house’s sales price. This way he will try to find the highest bidder so he can maximize the amount of money he gets and you can get the best possible price for your house. 2. Suppose you own one share of stock in ABC Inc. and one share of stock in XYZ Co. You can sell both shares at $100, but it will take you much longer to find a buyer willing to pay $100 for XYZ compared to ABC. a. Which stock is more liquid? b. If you had to sell both stocks today, which one would sell for a higher price? a. The stock for ABC Inc. is more liquid because it can be sold more quickly with limited price impact. b. The stock for ABC Inc. would sell for a higher price because it is the most liquid out of the two. 3. National Bank pays 3% simple interest on its...
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...Finance – Finance is the management of large sums of money. Finance is something that every person, business, or government agency must deal with if they want to be successful. Finances cannot be ignored or left on their own to take of themselves. Efficient Market – This is the extent that stock prices will reflect all information that is available. This was a theory developed in the 1970’s and it means that an investor cannot do better than the market itself. There is no one set agreement on market efficiency from the many investors around the world. There are different levels of this theory. Some investors look for undervalued stock in hopes that they will rise again. Primary Market – This market is used to issue new securities. Companies use this to help gain financing for their firm. Investment banks will set the starting price. They also watch over the sale of those securities to investors. Secondary Market – This market is used to buy securities from other investors instead of the companies they originated from. The NYSE and NASDAQ are secondary markets. Secondary markets are also used for other types of securities to be purchased such as mortgages from lenders. Risk – Risk is defined as taking a chance. In the finance world, investors are risking their money all of the time in hopes of making more money than they started with. This is not always the case Security – This is something that represents an investor has some type of ownership in a company or a creditor...
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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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...Defining Financial terms * Finance * Finance is the study of how people and businesses evaluate investments and raise capital to fund them. Our interpretation of an investment is quite broad. * Business use finance to study every decision they make from investing in a product to market short term or long term, and if the ROI is worth-while or not. Firms must also use this study when recruiting vendors, sub-contractors, and even fresh new employees all of these are investments that need to have a positive ROI in the eyes of the company. * Efficient market * An efficient market is a market in which all the available information is fully incorporated into securities prices, and the returns investors will earn on their investments cannot be predicted. * No insider trading or information. Information is available publicly and traded shares are traded based on equal footing. * Primary market * A part of the financial market where new security issues are initially bought and sold for the first time. * This gives companies the opportunity to raise money for the company. * Secondary market * The financial market where previously issued securities such as stocks and bonds are bought and sold. * This is where investors trade their securities. Companies do not receive any additional money in these transactions it is the profit or loss of the investor. * Risk * The chance that an investment's actual return...
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...Finance Terms and Roles Paper Finance is simply the management of money. It is also described as the study of how people and businesses evaluate investments and raise capital to fund them (Mayo, 2012). When one think of finance, the first thing that comes to mind is cash flow (the amount of cash a company spend and receives.) The financial aspect of business includes receipt of cash, sales, management of finances, amongst other financial transactions. Loans and investments into a business is one of the first portions business owners seek knowledge in. Most first time business owns seek out loans and investments for startup money. Finance is an important aspect of business and in everyday situations. An efficient market is when all of the market’s participants can see the values of a public company at any given moment. The importance of an efficient market is there are not any over or undervalued stocks because all stock is traded based on information that is available to everyone. In this market businesses are able to raise money. A primary market is a financial market in which new securities (tradable assets) are bought and sold the initial time (Mayo, 2012). On the other hand, a secondary market is a market where previously issued securities are bought and sold (Mayo, 2012). Companies do not receive any additional money in a secondary market. A loss is a loss and a profit is a profit. Risk is the chance investors take when investing money into a business. Investors take...
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...Finance Organization and Long-Term Planning Introduction Sensible Essentials, after considering the Genesis Corporation aggressive growth plan, suggested that Genesis should consider broadening their financing to consider long-term financing beyond just short-term financing. The organization has provided the potential costs and benefits of each long-term option available. Long-Term Financing A company needs long-term financing if they want to expand their business as Genesis is planning by starting operations in Europe and Asia. Sources of long-term financing include shares that are issued to the public and these holders are considered the owners of the business. There are two types of shares – equity and preference. The advantages of equity capital is no fixed maturity, no obligation to redeem, no compulsion to pay dividends, provides leverage capacity, and dividends tax exempt for investors. The disadvantages of equity capital are dilution of control of existing owners, high cost – rate of return expected by the equity holders higher than debt holders, dividends are not tax deductible, issue cost are higher due to underwriting, brokerage, and other issue expenses, along with higher servicing costs including post annual reports (Fedorov, 2012). Preference capital advantages are no obligation to pay dividend, no bankruptcy or legal action for non payment, financial distress of redemption obligation not very high, part of net worth which hence increases its creditworthiness/leverage...
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...MG 670 Finance Term Project Click Link Below To Buy: http://hwcampus.com/shop/mg-670-finance-term-project/ MG 670 Finance Term Project Company : Costco and Walmart MG 670 Finance Term Project Guidelines There is a lot to be said for valuing a company, it is no easy task. If you have yet to discover this moneymaker, the satisfaction one gets from tearing apart a company’s financial statements and analyzing it on a whole different level is great – especially if you make or save yourself money for your efforts. In this project, you will analyze the fundamental financial ratios. The ratios should be presented in a simplified manner to make them easier to understand. Sure some of the ratios have different varieties, but by the end you will understand the basic premise and reasons for fundamental analysis. You will work in groups of three or four people for this project. You will be analyzing two public traded companies within the same industry; as well, you will also evaluate these companies against their industry standards for performance. To find the data for your ratio analysis, you will need each company’s latest financial figures. Finding these financial reports can done by searching the internet through some of these sources, but not limited to: • Company Websites – Almost every public company has a website or investor relations department. For the most current quarterly or annual report you might want to check in these places first. Walt Disney is an excellent...
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...STRICTLY CONFIDENTIAL BSRM Information Memorandum for: Term Loan Facility: BDT 1,987 Million Arranger Agrani Bank Co-Arranger IDLC of Bangladesh Limited February 2006 Disclaimer This confidential Information Memorandum (IM) on BSRM Steels Limited, in connection with the proposed Syndicated Term Loan of BDT 1,987 Million has been compiled by Agrani Bank (Lead Arranger) & IDLC of Bangladesh Ltd. (Co-arranger) with a view to assisting the lenders in assessing the merits of the offer. The information, opinion and projections contained in this Information Memorandum have been supplied by the client. BSRM Steels Limited has confirmed to the Arranger & Coarranger that, to the best of its knowledge and belief and except as otherwise provided in this Information Memorandum, such information is true and fair in all material respects as at February 2006, that all such opinions are honestly held by the company, that all such projections are fair and accurate in all material respects having regard to the circumstances now prevailing and in the light of the assumptions made and that the Information Memorandum does not omit any information such that its omission would make this Information Memorandum or any information contained herein inaccurate, untrue, or misleading in any material respect. Agrani Bank & IDLC Of Bangladesh Ltd., in their role as Arranger and Co-arranger respectively have not independently verified the information, opinions or projections referred to in the IM. No...
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