Finance Week 1 Terms

Week 1 Term’s

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Finance – the management of large amounts of money, esp. by governments or large companies.

Efficient market – is one where the market price is an unbiased estimate of the true value of the investment.

Primary market - A market that issues new securities on an exchange. Companies, governments and other groups obtain financing through debt or equity based securities.

Secondary market - A market where investors purchase securities or assets from other investors, rather than from issuing companies themselves.

Risk - A probability or threat of a damage, injury, liability, loss, or other negative occurrence that is caused by external or internal vulnerabilities, and that may be neutralized through preemptive action.

Security - freedom from danger, risk, etc.; safety. Something that secures or makes safe; protection; defense.

Stock - the goods or merchandise kept on the premises of a business or warehouse and available for sale or distribution.

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 other assets owned by a person or organization or available or contributed for a particular purpose such as starting a company or investing.

Debt - something, typically money, that is owed or due.

Yield - Finance the amount of money brought in, e.g., interest from an investment or revenue from a tax; return

Rate of return - The gain or loss on an investment over a specified period, expressed as a percentage increase over the initial investment cost.

Return on investment - A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments.

Cash flow - A revenue or expense stream that changes a cash account over a given period. Cash inflows usually arise from one of three activities - financing,...