Financial Terms and Roles
· Finance -- The science of the management of money and other assets.
· Efficient market – A market in which prices correctly reflect all relevant information.
· Primary market – This is part of the capital market that deals with issuing of new securities.
· Secondary market – This part also called the aftermarket, is the financial market in which previously issued financial instruments such as stock, bonds, options, and futures are bought and sold. Another frequent use of the secondary market is to refer to loans which are sold by a mortgage bank to ...view middle of the document...
· Bond -- A debt that is issued for a period of more that one year. The government sells bonds. When an investor buys bonds, he or she is lending money. The seller of the bond agrees to repay the principal amount of the loan at a specified time. Interest-bearing bonds pay interest periodically.
· Capital – Financial assets or the financial value of assets, such as cash, it refers to financial resources available for use.
· Debt – An amount owed to a person or organization for funds borrowed.
· Yield – This is the percentage return paid on a stock in the form of dividend or the effective rate of interest paid on a bond or note.
· Rate of return – The gain or loss on an investment over a specified period, expressed as a percentage increase over the initial investment cost.
· Return on investment – A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of number of different investments.
· Cash flow – The revenue or expense stream that changes a cash account over a given period. Cash inflows usually arise from one of three activities, financing, operations or investing, although this also occurs as a result of donations or gifts in the case of personal finance. Cash outflows result from expenses or investments. This hold true for both business and personal finance.