Defining Financial Terms
Individual Assignment: Defining Financial Terms
A. Finance – The management of money, other assets, banking, investments, credit, monetary resources, and capital. B. 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. There are many degrees of including strong, semi-strong and weak. Efficient market means that the market is performing as anticipated and has not been affected by the current economy or news reports. C. Primary Market – A market in which new, as opposed to previously issued, securities are traded. Investors get the first chance at purchasing the new security issuance. This gives the issuing company the cash proceeds from the sale which is mostly used to expand the business or provide money for future operations. D. Secondary Market – The market tin which stock previously issued by the firms trade. A secondary market is considered to be NASDAQ or the New York Stock Exchange. Mortgages are often thought of as a secondary market because they are resold to different investors. E. Risk – The likely variability associated with expected revenue or income streams. With risk prices fluctuate when it comes to securities. F. Security – What is purchased for investment purposes and not for the resale to customers. This is to protect investors for loss of value in a bad economy. G. Stock- A share of ownership in a company. Each stock shows a single share of ownership in a company. Stocks go up and down depending on the day. For a stockholder it can be a great time of concern depending on the economy and the status of the company they share hold with. H. Bond – A type of debt or a long term promissory note, issued b the borrower, promising to pay it’s holder a predetermined and fixed amount of interest each year. There is not always interest...
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