Studying money and how it’s controlled either by an individual or by a business. Several portions of finance are considered imperative. One key component of finance is the knowledge and understanding of credit and how it works within banking.
• Efficient market
This type of market ‘a values of assets and securities are reflected and made available to the public at all times. An efficient market is a market that an investor would want to make investments in.
• Primary market
This is the type of market in which an individual is able to buy and maintain stocks and bonds that are new securities. This is the only point in which an issuing firm makes money from their stocks. The money that the individual would use to purchase stocks goes to the stock issuer. This relationship makes ...view middle of the document...
Securities can be traded within primary and secondary markets.
Represents the original investment paid into or capitalized in the corporation by its founders. It can serve as a safety for the creditors of a corporation.
A bond is a debt security. This is when the individual issuing the bond becomes obligated to the buyer. The issuer must re-pay the bond at a later time including accrued interest. Bonds are usually sold by businesses and governments.
This can be defined as currency used by various businesses to buy the necessary items needed to run their foremost operating activities. Capital is provided by both investors and banks. Usually, banks can provide capital by providing loans. Investors will provide currency expecting a return.
This is the quantity of currency that is due by one being to another. Debt is used to increase capital to start or increase existing procedures. The debtor will usually repay the creditor the principle amount that is owed including interest.
This is the amount of revenue generated by an investment. Various securities pay yearly or periodical dividends. Yield also refers to interest payments and fixed revenue investments like bonds.
• Rate of return
The ratio between the quantity of currency invested and the currency that is increased from an investment over a certain amount of time. This can also serve as a tool to understand an investment’s performance.
• Return on investment
This is just like the rate of return, however, the return on investment refers to the quantity of currency increased by an investment. This gives the investor the actual quantity of income or loss acquired from an investment.
• Cash flow
Cash flow is the amount of currency that is either acquired or paid out by an establishment. A business doesn’t need to produce money to be considered profitable, however liquidity is provided.