Defining Financial Terms Fin/370

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Fin/370
I

Defining Financial Terms:

Finance- The study of how people and businesses evaluate investments and raise capital to fund them and it help organizations to study every decision they make from investing in a product to market short term or long term *

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. In this type of market 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 providing the companies with the opportunity to raise money.

Secondary market- The financial market where previously issued securities such as stocks and bonds are bought and sold. Here investors trade their securities. Resulting in no additional money in these transactions to the company. It is the profit or loss of the investor.

Risk- The chance that an investor’s actual return will be positive from what was expected. This includes the possibility of losing some or all of the original investments. Risk come is different ways they are usually measured by calculating the standard deviation of the historical returns or average returns of a specific investment. A high standard deviation indicates a high degree of risk.

Security- Securities are tradable there are a documents in the form of bonds and stocks showing that one owns a portion of a publicly-traded company or is owed a portion of a debt issue.

Stock- A portion of ownership in a corporation. The holder of a stock is entitled to the company's earnings and is responsible for its risk for the portion of the company that each stock represents. It is important to note that a single share of a stock usually represents only a tiny amount of ownership, and, therefore, most stocks...
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