Fin//370 Week 1 Terms Essay

Financial Terms for FIN/370 * Week 1 * * * Finance Basically, finance looks at anything that has to do with money and the market. Efficient market refers to the degree to which the aggregate decisions of all the market’s participants accurately reflect the value of public companies and their common shares at any moment in time. Primary market is that part of the capital market that deals with the issuance of new securities. Secondary market A market where investors purchase securities or assets from other investors, rather than from issuing companies themselves. The national exchanges – such as NY Stock Exchange and the NASDAQ are secondary markets. Risk is the chance that an investment’s actual return will be different than expected. Risk includes the possibility of losing some or all of the original investment. Security is an investment instrument, other than an insurance policy or fixed annuity, issued by a corporation, government, or other organization which offers evidence of debt or equity. Stock is a type of security that signifies ownership in a corporation and represents a claim on part of the corporation’s assets and earnings Bond is a debt instrument issued for a period of more than one year with the purpose of raising capital by borrowing. It is generally a promise to repay the principal along with interest on a specific date. Capital is cash or goods used to generate income either by investing in a business or a different income property. The money, property, and other valuables which collectively represent the wealth of an individual or business. Debt is an amount owed to a person or organization for funds borrowed. Debt can be represented by a loan note, bond, mortgage or other form stating repayment terms and, if applicable, interest requirements. Yield is the annual rate of return on an investment,