fin 370 wk 1

University of Phoenix Material

Definitions

Define the following terms using your text or other resources. Cite all resources consistent with APA guidelines.

Term
Definition
Resource you used
Time value of money
This refers to the principle that a dollar on hand today has more value than a dollar received sometime in the future.
Keown, A. J., Martin, J. D., & Titman, S. (2014). Financial Management: Principles and Applications (12th ed.). : Pearson Education, Inc..
Efficient market
Refers to the type of market where everyone receives the same time of information and prices are reflected based on this information.
Business Dictionary.com. (n.d.). Retrieved from http://www.businessdictionary.com/definition/efficient-market.html
Primary versus secondary market
Primary market refers to the securities a company sells for the first time for the purpose of raising money. Securities traded after initial investment are done through the secondary market. In the primary market, the issuing firm receives the money; in the secondary market if the shareholder of the firm decides to sell he receives the money.
Keown, A. J., Martin, J. D., & Titman, S. (2014). Financial Management: Principles and Applications (12th ed.). : Pearson Education, Inc..
Risk-return tradeoff
This principle is based on the risk that investors are willing to take for a promise of higher returns on investments.
Keown, A. J., Martin, J. D., & Titman, S. (2014). Financial Management: Principles and Applications (12th ed.). : Pearson Education, Inc..

Agency (principal and agent problems)
Refers to the problem companies face in motivating their managers who act as agents in pursuing the interests of the owners (shareholders).
Keown, A. J., Martin, J. D., & Titman, S. (2014). Financial Management: Principles and Applications (12th ed.). : Pearson Education, Inc..
Market information and security prices and information asymmetry
Security prices change as information is provided to all investors.