...Financial Terms and Roles Stephani Calabrese February 10, 2014 FIN/370 Matthew Tanzer Financial Terms and Roles Create a list of definitions for the following terms and identify 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...
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...Financial Terms and Roles Katie Bradbury FIN/370 July 1, 2013 Derek Webster “Finance is the study of how people and businesses evaluate investments and raise capital to fund them” (Mayo, 2012). Finance is the practice of generating, moving and using currency, allowing the flow of money through a business in the same way of the money flow throughout the world. Efficient market is a market that holds all relevant information to contributors under the same roof, and where prices react instantly to accessible information. The best example for an efficient market would be the stock market. “Primary market is a market in which new, as opposed to previously issued, securities are bought and sold for the first time” (Mayo, 2012). By doing this people are able to help finance their new/old businesses. Secondary market a market where previously issued securities i.e. bonds, shares, notes and financial instruments like bills of exchange and certificates of deposit are purchased and sold. Stock exchanges do serve as secondary markets, this helps reduce the risk of investments and maintains liquidity in financial systems. Risk is the foundation for appraising all investments. Risk is one major concept of finance due to the greater the risk the greater the anticipated return. Security is an investment instrument that signifies an ownership position in a publicly traded corporation. A security is any fungible, negotiable financial instrument that represents some...
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...Financial Terms and Roles FIN/370 Vicky Tillman June 15, 2013 Financial Terms and Roles Create a list of definitions for the following terms and identify their roles in finance. 1. Finance- The study how people and business evaluate investments and reuse capital to fund them. 2. Efficient Market- Market where all pertinent information is available to all participants at the same time and where prices respond immediately to available information. 3. Primary Market- Financial market in which newly issued securities are offered to the public. 4. Secondary Market- Financial market where previously issued securities and financial instruments are bought and sold. 5. Risk- The probability that an actual return on an investment will be lower than the expected return. 6. Security- A financing or investment instrument issued by a company or government agency that denotes an ownership interest and provided evidence of a debt, a right to share in the earnings of the issuer, or a right in the distribution of a property. 7. Stock- The proportional part of a company's equity capital represented by fully paid up shares. 8. Bond- A written and signed promise to pay a certain sum of money on a certain date or on fulfillment of specified conditions. 9. Capital- Wealth in the form of money or assets taken as a sign of the financial strength of an individual organization, or nation, and assumed to be available...
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...Financial Terms and Roles · Finance -- The science of the management of money and other assets. · Efficient market – A market in which prices correctly reflect all relevant information. · Primary market – This is part of the capital market that deals with issuing of new securities. · Secondary market – This part also called the aftermarket, is the financial market in which previously issued financial instruments such as stock, bonds, options, and futures are bought and sold. Another frequent use of the secondary market is to refer to loans which are sold by a mortgage bank to investors such as Fannie Mae and Freddie Mac. · Risk – The possibility that shareholders will lose money when they invest in a company that has debt, if the company’s cash flow proves inadequate to meet its financial obligations. · Security – is a negotiable financial instrument with a recognized financial worth. · Stock – The capital raised by a corporation through the issue of shares entitling holders to an ownership interest (equity). · Bond -- A debt that is issued for a period of more that one year. The government sells bonds. When an investor buys bonds, he or she is lending money. The seller of the bond agrees to repay the principal amount of the loan at a specified time. Interest-bearing bonds pay interest periodically. · Capital – Financial assets or the financial...
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...Financial Terms and Roles Alvaro Garcia Jr. FIN/370 August 19, 2013 Dr. Rachel Ang Finance – Individuals and businesses evaluate investments and raise capital to fund them. Understanding and having knowledge of finance will benefit both personal and professional life. Efficient market – Investors respond to new information buying and selling their investments the speed with which investors act and the way that prices respond to the information determine the efficiency of the market. Primary market – is a market in which new, as opposed to previously issued, securities are bought and sold for the first time. The key feature of the primary market is that the firms selling securities actually receive the money raised. Secondary market – is where all subsequent trading of previously issued securities takes place. The principal benefit of the secondary market for the shareholders of firms that sell their securities to the public, you could easily sell those shares in the secondary market if you decided you no longer wanted to hold them. Risk – Do not take additional risk unless expected to be compensated with additional return. For example, offering investors a higher expected rate of return on the riskier investments. Security – Security markets provide a link between the corporation and investors. The securities markets are another component of the financial marketplace. Stock – Stock prices can react to information, good decisions will result in higher stock prices...
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...Financial Terms and Roles Name FIN/370 Date Instructor Financial Terms and Roles 1. Finance: Finance is basically the source used to obtain currency. For example, if one wanted to buy a house and they borrowed from the bank, the bank is the form of finance and the cash is the currency. Its role in finance provides the source of where one received money to make purchases. 2. Efficient Market: This is a term to hypothesize that the prices current in the market are honest/fair. These prices are to show all information related to its market. Its role in finance is to keep markets running smoothly. 3. Primary Market: A primary market is the location where securities are initially given. Securities can be issued in two forms, debt or equity based. Companies by any group that wants to create or raise finance can give out these two forms. 4. Secondary Market: Unlike primary markets, a secondary market is another investor rather than a company. So, it is an investor that sells securities to another investor and these can be more or less expensive than primary markets. 5. Risk: Risk is basically the uncertainty of the outcome of any transaction or investment. Its role in finance occurs in every transaction. 6. Security: Securities are the stocks that condone ownership or a bond that condones an agreement of debt. Types of securities include bonds, notes, common stocks, warrant or any type of financial assets. 7. Stock: Stock is the ownership...
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...Financial Terms and Roles Finance: is when we study how organizations and individuals evaluate investments and how they choose to fund them. Efficient market: An efficient market is like a perfect competition in that the information is available to everyone and the prices change as new information is presented immediately. One example of a efficient market would be the stock market like the NASDAQ as it presents the information electronically to everyone immediately. Primary market: A Primary market is the first place a security or bond is sold directly from the company trying to raise funds by selling to the public sector. This would be a IPO or initial public offering. A primary market is useful to the world of finance by helping companies borrow money from the capital market to expand their business. Secondary market is when the IPO sold in the primary market is sold again or traded between different investors. This can raise or lower the worth of the stocks or bonds issue by the original company. This is a way for the original investor to then recoup his costs because he is selling the security to someone else preferably at a profit. Risk: risk is when you have something to lose when it refers to the financial industry it is normal a fiscal risk involved where if you invest this money and something doesn’t happen then you can lose your investment. Many times the higher the risk the better the reward but you can also have massive losses as well. Security...
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...Financial Terms and Roles * Financial Terms * * Finance- the study of how people and businesses evaluate investments and raise capital to fund them Efficient market-Market where all pertinent information is available to all participants at the same time, and where prices respond immediately to available information. Primary market- a market in which new, as opposed to previously issued, securities are bought and sold for the first time Secondary market- where all subsequent trading of previously issued securities take place Risk- probability or threat of damage, injury, liability, loss or any other negative occurrence causing external or internal vulnerabilities Security- a negotiable instrument that represents a financial claim Stock- security that represents equity ownership Bond- debt that has matured longer than ten years and is sold in the capital market Capital- A form of money, or assets taken as a sign of financial strength of an individual, organization, or nation available for developing or investing Debt- money that a business owes Yield- a percentage of invested money annually earned from an investment Rate of return- The loss or gain of an investment over a period of time Return on investment- the earning power of assets Cash flow- incoming and outgoing operating activities of an organization in the form of cash * * Roles * Finance- finance refers to capital budgeting, capital structure decisions, and working capital...
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...Financial Terms and Roles FIN 370 Financial Terms and Roles 1) Finance – is the resource from which cash is made from liabilities and owner’s equity. There are two different types of financing, short term and long term financing. Short term financing is when you borrow cash for less than a year, and long term is borrowing for more than a year. 2) Efficient Market – This means that it can be hypothesized that prices can prevail in a market that is assumed to always be fair. 3) Primary Market – This is the market where the issuing of securities is first exchanged. Different groups, companies, and the government, issue equity or debt based securities in order to raise financing. Many companies can sell or issue the securities at a specific price to an investor directly and the price can be at either less than par or at par. If the security is at par then it is called a premium, and if the security is below par then it is called a discount. Investors cannot buy securities from another investor, but the price will remain the same for any buyer. 4) Secondary Market – This market is where different investors buy securities from other investors instead of from the companies that issue the securities. In this market the prices are very different from the price that was set when the security was issued and is affected by the market sentiments, this means that the security issuer cannot be affected and can be a loss or gain for the investor. ...
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...Financial Terms and Roles FIN\370 Jeff D. Garcia Finance - the management of revenues, esp. those affecting the public, as in the fields of banking and investment * 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. * Primary market - Market in which buyers and sellers negotiate and transact business directly, without any intermediary such as resellers. * Secondary market - Financial market where previously issued securities (such bonds, notes, shares) and financial instruments (such as bills of exchange and certificates of deposit) are bought and sold. All commodity and stock exchanges, and over-the-counter markets, serve as secondary markets which (by providing an avenue for resale) help in reducing the risk of investment and in maintaining liquidity in the financial system. * Risk - Finance: The probability that an actual return on an investment will be lower than the expected return. Financial risk is divided into the following categories: Basic risk, Capital risk, Country risk, Default risk, Delivery risk, Economic risk, Exchange rate risk, Interest rate risk, Liquidity risk, Operations risk, Payment system risk, Political risk, Refinancing risk, Reinvestment risk, Settlement risk, Sovereign risk, and Underwriting risk. * Security - Finance: A financing...
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...Financial Terms and Roles Lauren White FIN/370 February 25, 2013 Wayne Mitchell Financial Terms and Roles Create a list of definitions of the following terms and identify their roles in finance: • Finance: The science that describes the management, creation, and study of money, banking, investments, credit, assets, and liabilities. Finance can be broken down into three major sub-categories: public, corporate, and personal finance. Major studies include financial systems and instruments that can relate to countless assets and liabilities. • Efficient market: A market whose prices quickly respond to the announcement of new information. • Primary market: A part of the financial market where new security issues are initially brought and sold. • Secondary market: The financial market where previously issued securities such as stocks and bonds are bought and sold. • Risk: The possibility that shareholders will lose money when they invest in a company that has debt, if the company’s cash flow proves inadequate to meet its financial obligations. Companies that use debt financing ensure that creditors are repaid before shareholders if the company becomes insolvent. • Security: A negotiable instrument that represents a financial claim that has value. Securities are broadly classified as debt securities (bonds) and equity securities (shares of common stock). • Stock: An instrument that signifies an ownership position in a company. Certain companies that are publically traded...
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...Financial Terms and Roles FIN/370 Financial Terms and Roles 1. Finance is the study of how people and businesses evaluate investments and raise capital to fund them. Finance is the study of money, banking, credit, investments, assets and liabilities. 2. Efficient market is a market in which all the available information is fully incorporated into securities prices and the returns investors will earn of their investments cannot be predicted. Weak-form asserts past security market information is fully reflected in securities prices. A semi-strong form asserts publicly available information is fully reflected in securities prices. The strong-form asserts all information, regardless of whether this information is public or private, is fully reflected in securities prices. 3. Primary market is the firms that raise money by selling securities actually receive the money. 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. 4. Secondary market is where all subsequent trading of previously issued securities takes place. The national exchanges - such as the New York Stock Exchange and the NASDAQ are secondary markets. The cash proceeds go to an investor rather than to the underlying company/entity directly. 5. Risk includes the possibility of losing some or all of the original investment. The greater the amount...
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...Finance: the management of money Efficient Market: unbiased estimate of the value of the investment Primary Market: market that issues new securities on an exchange Secondary Market: “investors purchase securities and/or assets from other investors, instead of issuing companies themselves” (Investopedia, 2012). A secondary market is reliable for getting money to an investor instead of a company. Risk: the chance investors take when lending that their money will not be repaid. This is something that all lenders take when giving a loan to a person, that person may never return the money that was borrowed therefore the lender is taking a risk. Security: “an instrument representing ownership, a debt agreement, or rights to ownership” (Investopedia, 2012). Security is something that all lenders have when lending to a consumer to protect their products. Stock: stock is the representation of ownership of a piece of a company. This is important in finance because if a company is going to better their items they need investors who purchase stocks. Bond: a debt investment when an investor borrows money, like a loan, to a company or a person at a fixed rate for a particular amount of time, also known as fixed-income securities. Capital: value of ones assets. This is needed in finance to find out how much a product is worth so the lender knows how much to borrow and the investor knows how much to borrow as well. Debt: the amount of money that a borrower owns a lender. This...
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...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. Bond A bond is a type of promissory note that is issued by the borrower. In the note the borrower promises to pay the holder of the note a predetermined rate of interest each year. Capital Capital is the measurement of the financial strength of a firm, government or even an individual. Debt A debt is an obligation to pay money for goods, or services rendered. Yield A yield...
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...Financial Terms and Roles 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...
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