Defining Financial Terms

Essay by RokksbizzleUniversity, Bachelor'sA, February 2014

download word file, 4 pages 0.0

Running Head: DEFINING FINANCIAL TERMS � PAGE �1� Defining Financial Terms � PAGE �2� Defining Financial Terms � PAGE �3�

Defining Financial Terms


April 1, 2013

Defining Financial Terms

During week one of FIN/370, I learned several concepts associated with the world of financial management. The class discussed the differences between the capital market, primary market, and the secondary market, and whether or not these markets were efficient. We also discussed the primary roles of the SEC, and how the Sarbanes-Oxley Act of 2002 enhanced the SEC's role in managing financial governance. I learned that a company's liquidity is measured through different ratios, and the advantages and disadvantages these ratios may provide. In order for me to be able to comprehend these concepts I had to start at the foundation and learn some financial terminology. In this paper I will compile a list of financial terms and give their definitions along with their roles in finance.

The first term is Finance . "Finance is the study of how people and businesses evaluate investments and raise capital to fund them," (Titman, Keown, & Martin, 2011, p. 4). The role of finance is to provide assistance to a company in terms of money management.

The next term is Efficient Market. An efficient Market is, "A market whose prices quickly respond to the announcement of new information," (Titman, Keown, & Martin, 2011, p. 734). The role of an efficient market is to level the playing field so that anyone who wishes to invest has the same information as everyone else.

Next we have Primary Market. A primary market is a market where the securities are new, and are bought and sold for the first time. The role in finance of a primary market is for firms to issue new securities that they...