Financial Terms

FIN370, Finance in Business

Defining Financial Terms

Finance - the commercial activity of providing funds and capital. Financial management is concerned with the maintenance and creation of economic value or wealth.

Efficient market - A market in which the values of all assets and securities at any instant in time fully reflect all available information, which results in the market value and the intrinsic value being the same.

Primary market - The primary market is a market in which new, as opposed to previously issued, securities are traded.

Secondary market - The secondary market is the market in which stock previously issued by the firm trades.

Risk - The likely variability associated with expected revenue or income streams.

Security - refers to the stock, bond, or other investment product itself rather than to evidence of ownership. Traditionally, a security was a physical document, such as stock or bond certificate, that represented your investment in that stock or bond.

Stock - the capital raised by a corporation through the issue of shares entitling holders to an ownership interest (equity);

Bond - A type of debt or a long-term promissory note, issued by the borrower, promising to pay its holder a predetermined and fixed amount of interest each year.

Capital - assets available for use in the production of further assets; wealth in the form of money or property owned by a person or business and human resources of economic value

Debt - money or goods or services owed by one person to another.

Yield - The percentage return paid on a stock in the form of dividends, or the effective rate of interest paid on a bond or note. The same as the expected rate of return.

Return on investment – (ROI) return on invested capital: (corporate finance) the amount, expressed as a percentage, that is earned on a company's total capital calculated by dividing the total capital into earnings before interest, taxes, or dividends are paid...