FIN/370, Week 1 assignment.
Finance, or financial management is concerned with the maintenance and creation of economic value or wealth for a business. This includes making and dealing with financial decisions and a focus on creating wealth.
o 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. This concept is used in businesses to perform well for shareholders and to maximize shareholder wealth.
o Primary market
Transactions in securities offered for the first time to potential investors. This type of transaction increased the total stock of financial assets outstanding in the economy.
o Secondary market
The market in which stock previously issued by the firm trades. These transactions contain previously purchased stock during the initial offering and resold by the owner or consumer.
Risk encompasses many terms, such as financial risk, interest rate risk, firm- specific risk, company-unique risk, exchange rate risk, etc. The word risk itself in business means the likely variability associated with expected revenue or income streams.
A certificate or piece of paper that proves ownership of stocks, bonds, and other investments. These certificates may be bearer, meaning they entitle the holder to right under the security, or registered, meaning they entitle the holder to rights only if he or she appears on a security register maintained by the issuer or an intermediary.
Stock is a security issued in the form of shares that represent ownership interests in a company. There are several types of stock such as common stock, adjustable rate preferred stock, convertible preferred stock, cumulative...