Financial Terms and Roles

Topics: Investment, Finance, Bond Pages: 3 (774 words) Published: May 20, 2013
FINANCIAL TERMS & ROLES Financial Terms and Roles Definitions for the following terms and their roles in finance: Finance Finance is the study of how people, businesses and institutions raise, allocate and invest capital to fund their operations. Finances role within any institution is the driving mechanism of how the different groups of people will measure the worth of a certain product, service or investment. Finance is the backbone of any company’s operation because without knowing where funding is coming from or where it is invested the company will have difficulties in succeeding. Efficient market An efficient market is that which that reflects accurate information available to all types of investors to make sure they are making sound decisions on securities and it is readily updated


upon creation. An efficient market helps investors when making decisions of where to place their money when considering the financial information of a specific company or asset base on facts. Primary market A primary market is that in which a company’s securities are sold and purchased for the first time for an exchange of money to fund capital to finance its operations. Here the role a primary market has for a company is to create additional funds to expand, grow and even finance a company’s future. Secondary market A secondary market makes it possible for companies to trade securities between individual investors or corporations. A secondary market roles is to present a platform where these transactions are available to all.



Risk Risk is the degree of uncertainty a specific asset has in response to its expected and realistic return on investment. The role of risk within finance is the change that is taken in order to see if the investment is a viable one of a wrong opportunity. Security Security is known as a document that confirms the ownership of an asset, bond or any investment within a company. The role of a security in finance...
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