Running head: Financial Terms and Roles

Financial Terms and Roles Student Name Finance for Business/FIN370 Version 7 Date Instructor Name

Financial Terms and Roles Financial Terms and Roles Finance The s ud! of mone! and ho" i rela es o #an$ing% credi % in&es men s% asse s% and lia#ili ies 'In&es o(edia% 2013)* Finance hel(s in crea ing me hods and (rocedures o regula e mar$e s*

Efficient Market + (rice res(onsi&e mar$e in regards o ne" informa ion 'Ti man% ,eo"n% .ar in% 2011)* This mar$e $ee(s (ricing fair in correla ion o demand and /uan i !* Primary Market 0here ne" securi ies are ini iall! issued% #ough % and sold in he financial mar$e 'Ti man e al*% 2011)* This is "here cor(ora ions #egin life in he (u#lic rading for finance* Secondary Market 0here (re&iousl! issued securi ies are #ough and sold in he financial mar$e 'Ti man e al*% 2011)* The secondar! mar$e is "here he (u#lic rades o"nershi( of differen cor(ora ions* Risk The uncer ain ! of re urn on in&es men '.a!o% 2012)* Ris$ is sim(l! he un$no"n &aria#le as o "he her an in&es men "ill #ring a#ou (rofi % "i hou ris$ here "ould #e no re"ard and no reason o in&es * Security + re(resen a ion of a financial claim of &alue% such as s oc$s and #onds 'Ti man e al*% 2011)* 0i hou a 1ecuri ! he claim of o"nershi( "ould #e useless* Stock + signifier of o"nershi( in a cor(ora ion 'Ti man e al*% 2011)* 1 oc$ is essen ial he (roof of o"nershi( in a cor(ora ion% "i hou his one "ould no #e a#le o rade "i h fai h and hones !* Bond + long2 erm (romissor! no e o (a! a s(ecific amoun of in eres each !ear 'Ti man e al*% 2011)* 1imilar o 1 oc$ i is a legal con rac ha gi&es he in&es or reasona#le (eace of mind he erms "ill #e me *

Financial Terms and Roles Capital The financial resources a&aila#le for in&es men 'In&es o(edia% 2013)* 0i hou ca(i al here is no hing* 3a(i al is he resources ha a cor(ora ion has o in&es and is no earmar$ed for de# s* Debt .one! ha "as #orro"ed and mus #e re(aid 'Ti man e al*% 2011)* This hel(s a cor(ora ion ha o her"ise "ould no #e a#le o func ion* 4e# is as im(or an as ca(i al as one canno s(end "i hou i * Yield The re urn on a #ond '.a!o% 2012)* This is a signifier of he re urn one "ould e5(ec * Rate of Return + measuremen of he gain or loss o&er a s(ecific amoun of ime 'In&es o(edia% 2013)*

Return on In estment The re urn on an in&es men s a ed in a (ercen age "i h regards o gain minus cos di&ided #! cos 'In&es o(edia% 2013)* Cas! Flo" The re&enue or e5(ense e5changes for a cash accoun o&er a s(ecific (eriod 'In&es o(edia% 2013)*

Financial Terms and Roles References In&es o(edia '2013)* Finance* Re rie&ed from h (://"""*in&es o(edia*com/ erms/f/finance*as(* .a!o% 7* B* '2012)* Basic finance: +n in roduc ion o financial ins i u ions% in&es men s% and managemen '10 h ed*)* .ason% 87: 1ou h20es ern* Ti man% 1*% ,eo"n% +* 9*% - .ar in% 9* 4* '2011)* Financial managemen : :rinci(les and a((lica ions '11 h ed*)* ;((er 1addle Ri&er% N9: :earson/:ren ice 7all*