Fin 370 Week 1 Financial Terms Essay

472 WordsJul 30, 20112 Pages
Finance: The system that includes the circulation of money, the granting of credit, the making of investments, and the provision of banking facilities (Merriam-Webster). Finance pertains to the channeling of funds in the form of credit, loans, or invested capital to economic entities that can put the funds to use in a productive manner. * Efficient market: An efficient market is a title given to the stock market when all information relevant to the discounted present value of stocks is freely available to all participants in the market, and immediately incorporated into participants’ buying and selling plans. (Brittanica) * * Primary market: The market for new securities issued, purchased directly from the issuer. * * * Secondary market: The market where an investor purchases a security from another investor. * * * Risk: The possibility of loss, injury, disadvantage, or destruction. The product of the amount that may be lost and probability of losing it. (Merriam-Webster) * * All investments including stocks carry a risk; there is no guarantee of return. In finance different stocks carry different risks. For instance a fast, high return stock usually carries a higher risk of losing money as compared with a solid, proven stock that pays a lower return on investment. * * Security: Freedom from uncertainty or doubt. 2. One issued to investors to finance a business enterprise. (Merriam-Webster) * Stock: The debt or fund due from a government or a private company or corporation to individuals for money loaned at interest; a security representing such a debt or fund. (Merriam-Webster) * Bond: An interest-bearing document giving evidence of a long-term debt and issued by a government body or corporation sometimes secured by a lien on property and often designed to take care of a

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