Fin 370 Week 1 Terms

In: Business and Management

Submitted By john104
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Create a list of definitions of the following terms and identify their roles in finance:
Finance: This is the study of how people and businesses evaluate investments and raise capital to fund them. It is also considered to be the science of the management of money and other assets. One example would be family personal finances, taking what is being made versus what is being spent, and evaluating that to purchase vehicles, homes or other family needs.
Efficient market: This is a market whose prices quickly respond to the announcement of new information. One example would be the iphone. As soon as the new iphone 5 was released today, the iphone 4s is now on discount. Another great example would be the stock market, as these change drastically and often based on new announcements.
Primary market: This is a part of the financial market where new security issues are initially bought and sold. One great example would be Companies, governments or public sector institutions that funding through the direct purchase of a new stock or bond.
Secondary market: This is a financial market where previously issued securities such as stocks and bonds are bought and sold. A great example of this would be after the bank is issued stocks and bonds, they are then sold to consumers and customers at the bank.
Risk: Risk is a possibility for investments. Shareholders, investors, business owners all have a certain amount of risk. Risk is the possibility you'll lose money if an investment you make provides a disappointing return. All investments carry a certain level of risk, since investment return is not guaranteed. One example is investing in a business that goes belly up; it is a risk that did not pay off.
Security: An instrument that, for a stock, shows ownership in a firm; for a bond, indicates a creditor relationship with a firm or with a federal, state, or local government; or…...

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