Financial Terms and Roles

Financial Terms and Roles

FIN/370 Finance for Business

Financial Terms and Roles

Money and finance play a role in almost everyone’s life. Whether it is personal or business related, most of use have financial decisions that we must make daily. Decisions may be simple such as whether to purchase or bring lunch to work. They can also be complex and involve balancing employer budgets and the accountability of millions of dollars. Having a better understanding of how finance works can only help in our decision making process. The following are brief definitions of common terms found in finance.

Finance

Finance is the study of how people and business evaluate investments and raises capital to fund them (Mayo, 2012). Finance is the science of how money, investments, credit, debit, and banking are managed. Finance also includes the tracking of assets such as property, businesses, vehicles, name brands, and patents.

Efficient Market

An efficient market means that all information is available that investors need to make financial decisions. Information is updated frequently to give an accurate view of the market at any given time (All Business, 2014). This is important to investors so that they can limit their risk when investing. This is use for a variety of application but most commonly the stock market.

Primary Market

A primary market is a market in which newly issued securities are offered for sale, future contracts are offered for sale, and options are purchased. A market is primary if the profits of sales go to the company or person making the loan (All Business, 2014). In August of 2012 I purchased a new vehicle from Chevrolet. Although the car was purchased from Chevy, Ally Financial Incorporated financed the loan. Ally will profit from all interest paid.

Secondary Market

A secondary market is when existing loans and other assets are sold to investors (All Business, 2014). In December of 2013 I refinanced my home mortgage through USAA bank. In February they...