Fin/370 - Week 1 Individual Assignment

Topics: Investment, Debt, Finance Pages: 3 (618 words) Published: July 19, 2011
Pedro Reyes – FIN/370
Week 1 Individual Assignment

Resource: Financial management: Principles and applications Define the following terms and identify their roles in finance:

* Finance - The “science of funds management.” Finance includes saving money and often includes lending money. The field of finance deals with the concepts of time, money, risk and how they are interrelated. Finance also deals with how money is spent and budgeted. *

Efficient market - A market in which the values of all assets and securities at any point in time reflect all available public information. In order to understand what causes price changes in stock prices and how securities are valued or priced in the financial markets, it is necessary to have an understanding of efficient markets.

* Primary market - A market in which new securities are traded. This is the only time that the issuing firm actually receives money for its stock. There are two different types of offerings in the primary markets: initial public offerings and seasoned new issues or primary offerings.


* Secondary market - Once newly issued stock is in the public’s hands, it then begins trading in the secondary market. Securities that have previously been issued and bought are traded in the secondary market *

* Risk - The potential that a chosen action or activity will lead to a loss. Investors sometimes choose to put their money in risky investments because these investments offer higher expected returns. The more risk an investment has, the higher will be its expected return.

* Security - A fungible, negotiable financial instrument representing financial value. Securities can be traded within markets such as primary and secondary markets. *
* Stock - Represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business because it...
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