Financial Terms and Roles

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Financial Terms and Roles
Kelly L. Banks
FIN/370
May 23, 2012
Richard Harrell

Financial Terms and Roles

Finance: Finance is the study of how individuals and organizations identify how they will make investments. Efficient Market: Market that displays data that is readily available to all that need to make a decision on whether to invest or sell securities Primary Market: Market in which new securities are bought and sold. Secondary Market: Market where you sell shares that were previously bought in the primary market. It is where you sell off the shares of stock that you no longer want. Risk: When a corporation or individual analyze whether or not an investment will yield them a loss. Security: Negotiable instrument that represents a financial claim against a corporation. It can either be stocks or debt agreement. Stock: A form of equity security that represents partial ownership of a corporation. Bond: When a security has a maturity date of 10 years or more. Bonds typically has fixed rate for the life of bond. Capital: An individual or corporation assets that are available to them. Debt: An amount of money that an individual or corporation has that is borrowed or financed. Yield: Yield is dividend yield. Yield is obtained by dividing the firm’s annual cash dividend by the closing price of the stock that day. Rate of Return: Amount of money gained or lost on an investment relative to the amount of money invested. Return on Investment: When referred to as a percentage. Shows how profitable or unprofitable an initial investment was based on amount of money or resources initially invested. Cash Flow: The amount of money an individual or corporation has to move out of it at the end of a reporting period. The words and definitions above are intertwined with personal as well as business finance. In order to effectively administer your own finances and save and invest in your future, you have to have some insight on how these words relate to personal...
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