In: Business and Management

Submitted By freetage88
Words 523
Pages 3
Create a list of definitions for the following terms and identify their roles in finance.
Finance: 1) A branch of economics concerned with resource allocation as well as resource management, acquisition and investment. Simply, finance deals with matters related to money and the markets. 2) To raise money through the issuance and sale of debt and/or equity.
Efficient Market: Market where all pertinent information is available to all participants at the same time, and where prices respond immediately to available information. Stock markets are considered the best examples of efficient markets.
Primary Market: 1) Market in which buyers and sellers negotiate and transact business directly, without any intermediary such as resellers. 2) Financial market in which newly issued securities are offered to the public.
Secondary Market: Financial market where previously issued securities (such bonds, notes, shares) and financial instruments (such as bills of exchange and certificates of deposit) are bought and sold. All commodity and stock exchanges, and over-the-counter markets, serve as secondary markets which (by providing an avenue for resale) help in reducing the risk of investment and in maintaining liquidity in the financial system.
Risk: The quantifiable likelihood of loss or less-than-expected returns.
Security: 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: 1) Equity capital raised through sale of shares. 2) Proportional part of a firm's equity capital represented by fully paid up shares.
Bond: A type of debt or a long-term promissory note, issued by the borrower, promising to pay its holder a predetermined and fixed amount of interest each year.
Capital: Measure of the accumulated financial strength of…...

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