15-3a

774 Words Feb 5th, 2012 4 Pages
Individual Assignment: Defining Financial Terms
Resource: Financial management: Principles and applications
Define the following terms and identify their roles in finance:

• Finance - The management of revenues or other liquid resources of a government, business, group or individual; the conduct or transaction of money matters generally, especially those affecting the public, as in the fields of banking, investments and credit. It can simply be defined as sell on credit or commercial activities that are study to manage capital and assets.

Finance is an important part of any organization because it deals with resource allocation, accounting, resource management, and investments.

• Efficient market - A market in which the values
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• Risk- The likely variability associated with expected revenue or income streams. Is the potential of that a chosen action or activity (including the choice of inaction) will lead to a loss or an undesirable outcome. For an investor, it is a degree of uncertainty of return on an asset.

• Security – Investment tool issued by organizations that reflect the indication of the value of the equity or debt of the organization. Examples of security can be stocks, bonds, and certificate of deposits.

Securities are a way for an organization or corporation to raise funds.

• Stock - A security that represents ownership in a corporation and has claims on part of the corporation's assets and earnings per share.

Stocks play an important role in an organizations ownership position and power.

• Bond - A type of debt or a long-term promissory note, issued by the borrower, promising to pay its holder a predetermined and fixed amount of interest each year.

Bonds play a significant role in how financial managers make decisions in raising funds because many firms issue and sell bonds.

• Capital – money invested in a company to generate income

The understanding of capital and capital budgeting is important for companies to grow and expand.

• Debt - Consists of such sources as credit extended by suppliers or a loan from a bank.

Corporate financial

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