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Financial Terms Essay

556 words - 3 pages

Financial Terms
FIN/370 Finance for Business
September 21, 2011
Jerry Caldwell

1. Finance- The study of the management of funds. The role of finance in finance is to grow an organization with expense control which ultimately makes a company run smoothly. Without finance a company is not able to sustain.
2. Efficient market - An efficient market is characterized by a large number of profit-driven individuals who act independently (Keown, Martin, & Petty, "The Corporation and the Financial Markets: The Interaction," 2005). An efficient market has important information that is accessible to a group of people with the same intentions. Efficient market gives individuals the opportunity to make decisions at the same time. Strong, semi-strong, and weak are three levels of efficient markets.
3. Primary markets are those in ...view middle of the document...

Companies have to take risks that may potentially hurt or help the organization financially.
6. Security- Security is a financial instrument that represents ownership interest. Securities are warrants, bonds, options, shares, etc. Securities can be traded, sold or bought on financial markets or stock exchange.
7. Stock- Stock is a specified company shares that increase company’s assets. Individuals purchase stocks to invest in a company, especially when the stocks are low in price.
8. Bond- a debt investment that shows proof of a debt. A bond is an issued document to obtain funds. Bonds are used to finance numerous projects for companies and the government.
9. Capital- Capital is a business cash or assets. Capital is cash used to generate income for a company.
10. Debt- Debt is borrowed money owed to an organization or individual. There are different forms of debt. Loans are expressed as debt and may include interest rates. Repayment terms are given to repay the set amount. The government or a business acquires debt to raise capital and repays in an appropriate time frame.
11. Yield- Yield is income received from an investment. Yield identifies how much money has actually made for a company annually by using calculations. Yield is also called return.
12. Rate of return- (ROR) Rate of return is a percentage used to express a company’s gain or loss on an investment over a period of time. Rate of return is also called return.
13. Return on investment- (ROI) is a measure used to calculate or compare the effectiveness of different investments for a company. Return on investment is a performance measure that calculates the profitability of a company’s investment
14. Cash flow- Cash flow is the movement of cash throughout an organization. Cash flow is used to identify the financial strength of a company.
Reference
Keown, A., Martin, J., & Petty, J. (2005). Financial Management (10th ed.). Retrieved from The University of Phoenix eBook Collection database.

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