Fin 370 Week 1 Individual Assignment: Definitions Essay

740 WordsJul 25, 20113 Pages
FIN 370 Week 1 Individual Assignment | Define the following terms and identify their role in finance: | | a. | Finance:An area in the field of economics that involves the distribution of an organization’s resources including investment, acquirement of monies and the management of said monies. Finance can also be defined as the way an organization raises money through the sale of stock or equity in the organization.The role of finance is to help organizations obtain profits through the sales of stocks or shares in the organization to outside investors. | | b. | Efficient Market:The indication that the worth or price of stocks or alternative investments in an organization are precisely displayed and are an accurate account of the value of the investment. In an efficient market the organization, as well as the investors, are allowed access to all financial information pertaining to the organization so that there are no inconsistencies in markets. | | c. | Primary Market:The market for the issuance of new securities or stocks. In the primary market stocks or securities are purchased by the investor directly from the issuer of the stocks or securities rather than through a second or third party. | | d. | Secondary Market:The market in which investors acquire securities or stocks from other investors instead of the initial issuer of the stocks or securities. The secondary market is also known as the aftermarket. | | e. | Risk:The measurable prospect of the loss investors can take when purchasing securities or stocks when they do not result in the expected returns. There are many examples of financial risk including economic risk, inflation risk, market risk, and currency risk. | | f. | Security:An investment tool issued by organizations that reflect the indication of the value of the equity or debt of the organization. Security can include

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