Finacial Terms and Goals

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Week 1 Financial Terms and Roles
FIN370
January 14, 2014
Week 1 Financial Terms and Roles
1) Finance Finance is considers the management of how income acquired and used. Whether dealing with corporate or personal issues, finance may consist of how individual or business acquires, invest, and manage money. Financial decisions are the role finance plays, which consist of money as the resource and how and the source of how the organization obtain the revenue.

2) Efficient Market Efficient markets are a hypothesis that prices in a market are continually fair. This consists of incorporated market prices reflecting associated information completely. Keeping values current is the role efficient markets play by keeping market price fair and prohibiting anyone to make a high returns unless he or she buys a much high risk investment.

3) Primary Market A primary market is a marketplace where securities are distributed for the first time. The government, businesses, and other groups issue debt or equity-based securities permissible to raising finance. In primary market prices are the same for every buyer; however, investors in a primary market do not purchase securities from other investors.

4) Secondary Market A Secondary Markets is a marketplace where securities that already issued are sold or purchased by investors. Prices in a secondary market vary from the issue price and prices can vary from the original cost, although prices are affected by market sentiments in a secondary market issuers are not affected because of the changes in pricing.

5) Risk Risks are the probabilities of differences in the total investments earned on an annual return. These risks are divided in three different groups, market, credit, and operational risk. In finance risk plays a role in the return on investment. If the risk are low the return is low if…...

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