Financial Terms and Roles
January 19, 2013
Finance is a part of economics focusing on the allocation of resources, investments, and the study of funds. Finance encompasses everything related to the markets and money in general. Efficient Market
The best example of an efficient market would be the stock market. An efficient market is one in which important information is available to all parties at the same time resulting in the immediate change in pricing. Primary Market
The primary market, also known as the new issue market, is the market where new securities are first sold directly from the issuer. The primary market is also the only market where a corporation receives cash for theses securities. The sale of these new securities is usually overseen by investment banks that set a price for the securities and sell them directly to investors. All other movement of securities after the primary market takes place on the secondary market. Secondary Market
The secondary market is where previously issued stocks, bonds, futures, and options are bought and sold. The most common secondary market with which the public is familiar would be The Nasdaq and New York Stock Exchange. In the secondary market these securities are traded or sold from one investor to another investor, the entity of first issue does not participate in these transactions. Risk
In the world of finance risk is associated with many financial decisions. Usually when risk is involved in finance it involves the uncertainty of a return in investment, or the risk a creditor faces when granting loans to businesses, or individuals. Security
A security is a piece of paper, though more commonly found in an electronic form today, showing the ownership of stock in a publicly traded company, or bonds. Securities are tradable on the secondary markets like The Nasdaq and The New York Stock Exchange. Securities can also show that a portion of a debt is...
References: The Free Dictionary. (2013). Retrieved from http://financial dictionary.thefreedictionary.com/cash+flow on January 19, 2013
Titman, S., Keown, A., & Martin, J. (2011). Financial Management. Principles and Applications (11th ed.). Retrieved from The University of Phoenix eBook.
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