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Fin 370 Week 1 Essay

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Defining Financial Terms
Kyle O. Flinn
FIN/370
June 11, 2012
Marilyn Waters

Defining Financial Terms
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Finance – Is the management of revenues; the conduct or transaction of money matters generally, especially those affecting the public, as in the fields of banking and investment.
Role - Finance is how investors assign their assets over time under circumstances of certainty and uncertainty.

Efficient market - An investment theory that states it is impossible to "beat the market" because stock market efficiency causes existing share prices to always incorporate and reflect all relevant information.
Role - Proclaims that financial markets are "information ally efficient".

Primary market –   A market that issues new securities on an exchange.
Role - The market that is part of the capital markets that deals with the issuance of needs of securities.

Secondary market -   A market where investors purchase securities or assets from other investors, rather than from issuing companies themselves.
Role - Also called aftermarket, is the financial market in which formerly issued financial instruments such as stock, bonds, options, and futures are bought and sold.

Risk - The potential that a chosen action or activity (including the choice of inaction) will lead to a loss (an undesirable outcome).
Role - Chance that an investment’s actual return will be better than expected. It includes the possibility of losing some or all of the original investment.

Security - Is the degree of protection against danger, damage, loss, and crime.
Role – Is the way to insure money or investments from total loss.

Stock - The capital market (or simply stock) of a business entity represents the original capital paid into or invested in the business by its founders.
Role - Type of security that shows ownership in a corporation and represents a claim on part of the corporation's assets and earnings.

Bond - A debt investment in which an investor loans money to...

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