Defining Financial Terms

Defining Financial Terms
Finance: “Financial management is concerned with the maintenance and creation of economic value or wealth” (Keown, Martin, Petty, & Scott, 2005, p. 4).
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” (Keown et al, 2005, p. 231).
Role:   to present quick information with precise prices.
Primary Market: “transactions in securities offered for the first time to potential investors” (Keown et al, 2005, p. 484).
Role:   provides a channel for sale of new securities
Secondary Market: “the market in which stock previously issued by the firm trades” (Keown et al, 2005, p. 11).
Role:   gives an opportunity to investors/public an efficient place to trade   securities
Risk: “possibility of loss; the uncertainty that the anticipated return will not be achieved” (Mayo, 2007, p. 141).
Role:   involves in making decision finance.
Security: “ the price the convertible security would sell for in the absence of its conversion feature”(Keown et al, 2005, g-1).
Role:   may be used to put up for loan.
Stock:                 “the equity in the corporation. This is one kind security that represents the ownership in a corporation and also claim on corporation’s assets and earning” (Mayo, 2007,   p. 217).
Role: sock use for sale, trade, or investment.
Bond: “Long-term debt instrument which specifies the principal, the interest and the maturity date” (Mayo, 2007, p. 255).
Role:   helps with procedure according to financial needs.
Yield: “return on a bond express as a current yield (interest divided by the current price of the bond) or the yield to maturity (return earned from holding the bond until it matures)” (Mayo, 2007, p. 255).
Role: Income return from investment, interest and from security.
Capital: “ the decision-making process with respect to investment in fixed assets” (Keown et... [continues]

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