Finance Terms and Roles

In: Business and Management

Submitted By gasgiants
Words 746
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Finance – Finance is the management of large sums of money.
Finance is something that every person, business, or government agency must deal with if they want to be successful. Finances cannot be ignored or left on their own to take of themselves.
Efficient Market – This is the extent that stock prices will reflect all information that is available. This was a theory developed in the 1970’s and it means that an investor cannot do better than the market itself.
There is no one set agreement on market efficiency from the many investors around the world. There are different levels of this theory. Some investors look for undervalued stock in hopes that they will rise again.
Primary Market – This market is used to issue new securities.
Companies use this to help gain financing for their firm. Investment banks will set the starting price. They also watch over the sale of those securities to investors.
Secondary Market – This market is used to buy securities from other investors instead of the companies they originated from.
The NYSE and NASDAQ are secondary markets. Secondary markets are also used for other types of securities to be purchased such as mortgages from lenders.
Risk – Risk is defined as taking a chance.
In the finance world, investors are risking their money all of the time in hopes of making more money than they started with. This is not always the case
Security – This is something that represents an investor has some type of ownership in a company or a creditor type of relationship.
Securities can be in the form of a stock certificate, a bond, or some other type of instrument that represents financial value.
Stock – This is a security that is provided to an investor showing that they have some ownership in a company.
Stocks are very helpful for a company trying to raise capital. It allows an investor the ability to try and make money if the…...

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