Define Finacial Terms

Define the following terms and identify their role in finance:

a. Finance- Deals with money, to raise money such as issuance through debt, sale or equity.

b. Efficient Market- Characterized by a large number of profit driven individuals who act independently. Monetary resources for government or corporate organizations.

c. Primary Market- New, not previously issued, securities are traded and the funds go to the original issuer.

d. Secondary Market- Securities that have been bought and are being resold for a profit. These are usually done on the New York Stock Exchange or mortgage loans.

e. Risk- quantifiable likely hood of loss or less then return of goods. (http://www.investorwords.com/4292/risk.html)

f. Security- An investment instrument, other than an insurance policy or fixed annuity, issue by a corporation, government, or other organization which offers evidence of debt or equity

g. Stock- An instrument that signifies an ownership position (equity) in a corporation, and represents a claim on its proportional share in the corporation’s assets and profits

h. Bond- a debt instrument issued for a period of more than one year with the purpose of raising capitol by borrowing. A promise to repay the principal along with interest.

i. Capital- Cash or goods used to generate income either by investing in a business or a different income property.

j. Debt- amount owed to a person or organization for funds borrowed. Can be represented by a note loan, bond, mortgage or other form stating repayment terms and, if applicable, interest requirement.

k. Yield- Annual rate of return on an investment, expressed as a percentage. For bonds and notes, the coupon rate divided by the market price. Not an accurate measure of total return, does not factor in capital gains.

l. Rate of Return- expressed as a percentage of the total amount invested. Usually, but not always, calculated annually

m. Return on Investment- A measure of a...