Defining Financial Terms Fin370 Essay

662 Words Sep 28th, 2011 3 Pages
Defining Financial Terms

Individual Assignment: Defining Financial Terms

A. Finance – The management of money, other assets, banking, investments, credit, monetary resources, and capital. B. Efficient Market – A market in which the values of securities at any instant in time fully reflect all available information, which results in the market value and the intrinsic value being the same. There are many degrees of including strong, semi-strong and weak. Efficient market means that the market is performing as anticipated and has not been affected by the current economy or news reports. C. Primary Market – A market in which new, as opposed to previously issued, securities are traded. Investors get the first chance
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I. Capital – The amount of money and assets a company owns. This is all assets after the liabilities have been subtracted. This can also mean a share of stock with the company. An investor will always look at the assets and liabilities before making an investment decision. J. Debt – Consists of such resources as credit extended by suppliers or a loan from a bank. This includes money and inventory that is owed to another person or company. This is something that needs to be paid. No matter what the state of the economy is there is always debt among people and companies. K. Yield – An income return on investment. This is the current market value (or face value) for the company. This is important in finance because it is essential for the investor to know the yield in order to generate the profit of the company in a given time frame. L. Rate of Return – This is used to help an investor determine their level of interest. This is calculated annually and is usually done as a bank transaction. It is the percentage of the total amount invested. M. Return on Investment - This is used to compare the efficiency of a number of different investments or to evaluate the efficiency of an investment. This is done by dividing the return of investment by the cost of the investment. This is shown as a percentage or as a ratio. N. Cash Flow – The change is the cash account over a certain period of

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