Financial Terms and Definitions
April 5, 2012
Professor Professor Name
Finance is the study of how people and businesses evaluate investments and raise capital to fund them.
2. Efficient market:
Efficient market is the concept that all trading opportunities are fairly priced.
3. Primary market:
Primary market is a part of the financial market where new security issues are initially bought and sold.
4. Secondary market:
Secondary market is the financial market where previously issued securities such as stocks and bonds are bought and sold.
Risk is the potential that a chosen action or activity (including the choice of inaction) will lead to a loss (an undesirable outcome).
Security is a negotiable instrument that represents a financial claim that has value. Securities are broadly classified as debt securities (bonds) and equity securities (shares of common stock).
Stock is an instrument that signifies an ownership position in a corporation.
Bond is a long-term (10-year or more) promissory note issued by a borrower,
promising to pay the owner of the security a predetermined amount of interest each year.
Capital is the amount of cash and other assets owned by a business. These business assets include accounts receivable, equipment, and land/buildings of the business. Capital can also represent the accumulated wealth of a business, represented by its assets less liabilities.
Debt is money that has been borrowed and must be repaid. This includes such things as bank loans and bonds.
Yield is the income return on an investment. This refers to the interest or dividends received from a security and is usually expressed annually as a percentage based on the investment's cost, its current...
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