Fin 370
Financial Terms and Definitions
Your Name
FIN/370
April 5, 2012
Professor Professor Name
1. Finance:
Finance is the study of how people and businesses evaluate investments and raise capital to fund them.
2. Efficient market:
Efficient market is the concept that all trading opportunities are fairly priced.
3. Primary market:
Primary market is a part of the financial market where new security issues are initially bought and sold.
4. Secondary market:
Secondary market is the financial market where previously issued securities such as stocks and bonds are bought and sold.
5. Risk:
Risk is the potential that a chosen action or activity (including the choice of inaction) will lead to a loss (an undesirable outcome).
6. Security:
Security is 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).
7. Stock:
Stock is an instrument that signifies an ownership position in a corporation.
8. Bond:
Bond is a long-term (10-year or more) promissory note issued by a borrower,
promising to pay the owner of the security a predetermined amount of interest each year.
9. Capital:
Capital is the amount of cash and other assets owned by a business. These business assets include accounts receivable, equipment, and land/buildings of the business. Capital can also represent the accumulated wealth of a business, represented by its assets less liabilities.
10. Debt:
Debt is money that has been borrowed and must be repaid. This includes such things as bank loans and bonds.
11. Yield:
Yield is the income return on an investment. This refers to the interest or dividends received from a security and is usually expressed annually as a percentage based on the investment's cost, its current
Your Name
FIN/370
April 5, 2012
Professor Professor Name
1. Finance:
Finance is the study of how people and businesses evaluate investments and raise capital to fund them.
2. Efficient market:
Efficient market is the concept that all trading opportunities are fairly priced.
3. Primary market:
Primary market is a part of the financial market where new security issues are initially bought and sold.
4. Secondary market:
Secondary market is the financial market where previously issued securities such as stocks and bonds are bought and sold.
5. Risk:
Risk is the potential that a chosen action or activity (including the choice of inaction) will lead to a loss (an undesirable outcome).
6. Security:
Security is 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).
7. Stock:
Stock is an instrument that signifies an ownership position in a corporation.
8. Bond:
Bond is a long-term (10-year or more) promissory note issued by a borrower,
promising to pay the owner of the security a predetermined amount of interest each year.
9. Capital:
Capital is the amount of cash and other assets owned by a business. These business assets include accounts receivable, equipment, and land/buildings of the business. Capital can also represent the accumulated wealth of a business, represented by its assets less liabilities.
10. Debt:
Debt is money that has been borrowed and must be repaid. This includes such things as bank loans and bonds.
11. Yield:
Yield is the income return on an investment. This refers to the interest or dividends received from a security and is usually expressed annually as a percentage based on the investment's cost, its current