...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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...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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...• 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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...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 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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...Running head: DEFINING FINANCIAL TERMS Defining Financial Terms University of Phoenix Defining Financial Terms a. Finance: “Financial management is concerned with the maintenance and creation of economic value or wealth” (Keown, Martin, Petty, & Scott, 2005, p. 4). • Role in finance: Finance within a company is vital since it leads toward creating wealth. It helps make decisions such as when to introduce new products, when to invest in new assets, and when to borrow money. (Keown et al., 2005, p. 4). b. Efficient Market: “A market in which the values of all assets and securities at any instant in time fully reflect all available public information” (Keown et al., 2005, p. 16). • Role in finance: To provide quick information with accurate and right prices. c. Primary Market: “Transactions in securities offered for the first time to potential investors” (Keown et al., 2005, p. 484). • Role in finance: Provide a channel for sale of new securities. In addition, it also provides a variety of opportunities to those who issue securities such as corporations, or government, to raise resources to meet their requirements within their obligations. d. Secondary Market: “The market in which stock previously issued by the firm trades” (Keown et al., 2005, p. 11). • Role in finance: To provide a place for investors/public an efficient place to trade his/her securities. For management of firms, secondary markets serve as control...
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...Financial Terms Finance is defined as the management of money or funds; it is structured and regulated by a complex system of power relations within political economies across the state and global markets. Efficient Market is one where the market price is unbiased estimate of the true value of the investment. One factor to consider is that markets do not become efficient automatically, it is the actions of the investors, sensing bargains and putting into effect schemes to beat the market, that makes them efficient. The role of the efficient market in finance is to have a lower spread and lowest volatility of the market. Primary market is the part of the capital markets that deals with the issuance of new securities. Some of the features of primary markets are: new long term equity capital, the securities are sold for the first time, and the financial assets sold can only be redeemed by the original holder. The role of primary markets in finance is that they perform crucial functions of facilitating capital information in the economy. Secondary market which is also called aftermarket is the financial market in which previously issued financial instruments such as stocks, bonds, futures and options are bought and sold. One example is the loans that are sold by a mortgage bank to investors such as Freddie Mac. Their role in finance is to offer sellers the advantage of effectively reducing the purchase price of products and investments by recouping a portion of what they originally...
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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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...Running Head: Defining Financial Terms Defining Financial Terms University of Phoenix, SF 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...
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...Financial Terms 1 University of Phoenix Inthiravanh Amphonephong Defining Financial Terms FIN/370 Jason Bruno May 11, 2011 Defining Financial Terms 2 Financial Terms 1. FINANCE: A branch of economic that deals with resource management ROLE: Finance is any area of study that helps get manage or invest the money. There is business finance, investment finance, home finance, car finance, and many other types. For most people managing their own money, personal finance is the most important type of finance. 2. Efficient Market: Market efficiency has varying degrees: strong, semi-strong, and weak stock prices in a perfectly efficient market reflect all available information. These differing levels, however, suggest that the responsiveness of stock prices to relevant information may vary. Essentially, it means that the market is performing as anticipated and has been not been effected by current news reports. This is good news for investors as it allows some level of predictability. ROLE: Last week’s report on the U.S. increased unemployment rate had an impact on stock performance. 3. Primary Market: The primary markets are where investors can get first crack at a new security issuance. The issuing company or group receives cash proceeds from the sale, which is then used to fund operations or expand the business. Exchanges have varying levels of requirements which must be met before a security can be sold. Defining Financial Terms ...
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...Week 1 Financial Terms and Roles FIN370 January 14, 2014 Week 1 Financial Terms and Roles 1) Finance Finance is considers the management of how income acquired and used. Whether dealing with corporate or personal issues, finance may consist of how individual or business acquires, invest, and manage money. Financial decisions are the role finance plays, which consist of money as the resource and how and the source of how the organization obtain the revenue. 2) Efficient Market Efficient markets are a hypothesis that prices in a market are continually fair. This consists of incorporated market prices reflecting associated information completely. Keeping values current is the role efficient markets play by keeping market price fair and prohibiting anyone to make a high returns unless he or she buys a much high risk investment. 3) Primary Market A primary market is a marketplace where securities are distributed for the first time. The government, businesses, and other groups issue debt or equity-based securities permissible to raising finance. In primary market prices are the same for every buyer; however, investors in a primary market do not purchase securities from other investors. 4) Secondary Market A Secondary Markets is a marketplace where securities that already issued are sold or purchased by investors. Prices in a secondary market vary from the issue price and prices can vary from the original cost, although prices are affected by market sentiments...
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...Financial Terms and Roles Shannan Cousin FIN 370: Finance for Business April 13, 2013 Amy Grover, MBA In this paper I will outline the fourteen financial terms and roles for the following words finance, efficient market, primary market, secondary market, risk, security, stock, bond, capital, debt, yield, rate of return, return on investment and cash flow and identify their roles in finance in today’s business world. These fourteen terms and roles are very essentials in today’s business world. Running the assets of any business is not just responsible for one or two things. Financial management is extensive then you might think. The lack of success of most business is high. Many businesses would like to think that if they have a good business model, everlasting enthusiasm and work continuously they are sure to succeed. The proof speaks differently. Many rudimentary businesses hit economic barriers because the owner/ manager does not understand how to manage the financial affairs of his or hers business. The first term is finance “direct lending:” they acquire money given to you temporarily straight from a financial institution such as credit union or bank. In direct lending, the person who purchase agrees to pay the amount offered to loan, plus an agreed-upon finance charge, over a period of time. The second term is efficient market. The best way that I can explain this is market where all significant facts is available to all persons who take party in activities...
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...explore the role of development finance in economic development in Sub-Saharan Africa. Development Finance is practice of using scarce financial resources in an unconventional ways in order to advance economic activity(ies). According to (Nyembezi, 2009), development finance makes the economy run smoothly and effectively. The aim of the development finance is to look at the challenges and design the framework as well as stimulating core activities that will develop the economic growth. As stated by (Nyembezi, 2009) development finance, in an economy, can be compared to oil in a vehicle engine that ensures its sound and smooth operation. According to (Ocran, 2012), development finance is concerned with the financing of development at: • Household level • Firm level • Geographical area/national/regional level This paper looks at the role of development finance at national and regional level in economic development in Sub-Saharan Africa. The Organisation for Economic Co-operation and Development (2002) defines development finance officially as funding “used in measuring the inflow of resources to recipient countries: including (a) bilateral official development assistance (ODA), (b) grants and concessional and non-concessional development lending by multilateral financial institutions, and (c) Other Official Flows for development purposes (including refinancing Loans) which have too low a Grant Element to qualify as ODA”. The role of development finance and economic...
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...Financial Definitions Michelle Burrows FIN/370 July 8, 2013 Frank Roberts Financial Definitions 1. Finance: Finance is the study of how people and businesses evaluate investments and raise capital to fund them. 2. Efficient market: 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. Efficient markets role in finance is how the flow goods and reduce the inefficiencies of information for the entire market as a whole. 3. Primary market: is market in which new, as opposed to previously issued, securities are bought and sold for the first time. Primary market role in finance is the market of newly issued financial assets 4. Secondary market: is where all subsequent trading of previously issued securities take place. Secondary markets role in finance has to do with long-term growth and investment. 5. Risk: The chance that an investment actual return will be different than expected. The role of risk would be the basis for evaluating any kind of investment. 6. Security: negotiable instrument that represents a financial claim that has value.. 7. Stock: a security that signifies ownership in a corporation and represents a claim on part of the corporation’s assets and earnings. Stocks both capital and simple serves as a financial security to creditors 8. Bond: debt investment in which an investor loans money to an entity that borrows...
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