Finance Week 1 Financial Terms

         Finance - Finance is the study of how people and businesses evaluate investments

and raise capital to fund them. Finance is the study of how individuals and

businesses allocate money over time.

         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 - A part of the financial market where new security issues are

initially bought and sold.

         Secondary market - The financial market where previously issued securities such

as stocks and bonds are bought and sold.

         Risk - The chance that an investment's actual return will be different than expected.

Risk includes the possibility of losing some or all of the original investment.

         Security - A financial instrument that represents: an ownership position in a

publicly-traded corporation (stock), a creditor relationship with governmental body

or a corporation (bond), or rights to ownership as represented by an option.

         Stock - A type of security that signifies ownership in a corporation and represents a

claim on part of the corporation's assets and earnings.

         Bond - A debt investment in which an investor loans money to an entity (corporate

or governmental) that borrows the funds for a defined period of time at a fixed

interest rate.

         Capital - Wealth in the form of money or assets, taken as a sign of the financial strength of an

individual, organization, or nation, and assumed to be available for development or investment.

         Debt - Money that has been borrowed and must be repaid. This includes such

things as bank loans and bonds.

         Yield - The income return on an investment. This refers to...