FIN 370 Week 1 Individual Assignment Defining Financial Terms
FIN 370 Week 1 Individual Assignment Defining Financial Terms fin571
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Date Created: 11/11/15
Finance System including circulation for money, grant of credit, investment opportunities, and banking faculties Without finance, there would be no resource allocations for operating or functional expenditures. Efficient market Efficient market, information is simultaneously available with corresponding funds example stock market To make intellectual and wellintended fiscal decisions, information pertaining to funds must be readily accessible and available to provide insight and information for clients/investors/brokers. Primary market A market where the security is purchased directly from the issuer by the investor The primary market allows companies to offer bonds and stock to the public for the first time. It is closely related to the secondary market dependent upon one another to be most effective. Secondary market The transactions of stock from investors and dealers without the involvement of the company This market allows for the trading and selling of shares in stock. Without this market, the stock market would not exist. Once again it is dependent on the primary market. Risk The possibility of losing value towards investments Any investment incurs some risk for example of the stock crashes or market value declines. Security Type of investment instrument representing ownership in a company or evidence of debt. Security is important because it demonstrates holdings in a particular company. Examples would include notes, stocks, and bonds Stock An instrument that shows an ownership position in a corporation Stocks are vital for generating additional assets. Without stocks, investors would not have the opportunity to increase their finances. Bond A debt instrument with funds barrowed for more than 1 year for raising capital Bonds are important to raise funds to manage debt. They come with principle payment as well as interest. Bonds can revive an organization that is facing financial instability. Capital Money that is to be used as income or for investment purposes. Capital is vital to sustain an establishment for a long duration of time. It can also get an organization out of debt. Debt Any funds that must be paid from borrowing from an organization. Debt is never good when it cannot be repaid in a timely manner. Too much debt can equate to unstable finances resulting in bankruptcy. Yield The percentage return paid on a stock known as dividends or the effective rate of interest paid on a bond or note. A yield is important in finance in part to it is the determining factor of bank profibility Rate of return The equation to determine rate of return on an asset or portfolio is to take the sum of each of the possible rate of return multiplied by the probability for earning on each return. This is important for investor to gain an understanding and accurate calculation and representation for any funding deficits of surpluses pertaining to their investment Return on vestment A measurement that explains the effectiveness of how capital is used to generate profit It depicts the financial outlook for the company by displaying information from various components from the fiscal statements. The higher the ROI, the increased likelihood that a company will remain in good financial standing Cash flow The movement of cash into or out of a business, project, or a financial product measured during a specific period of time. Its importance sot the area of finances exemplifies the amount of funds being by the company as well as reimbursements made.
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