Defining Financial Terms

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Name: Walter Chisholm Date: August 1, 2011 Course: FIN/370 Finance for Business Topic: Defining Financial Terms Instructor: Rodney Nelsestuen Financial Management: Principals and applications. Define the following terms and identify their roles in finance: Finance - Financial management is concerned with the maintenance and creation of economic value or wealth. Consequently, this course focuses on decision making with an eye toward creating wealth. As such, we will deal with financial decisions such as when to introduce a new product, when to invest in new assets, when to replace existing assets, when to borrow from banks, when to issue stocks or bonds, when to extend credit to a customer, and how much cash to…show more content…
It is also known as shares or equity. ( Author J. K. et all- 2005) Bond – a debt investment in which an investor loans money to a corporate or government entity that borrows money for specified period of time at a fixed interest rate. Bonds are used by companies, municipalities, states, and the U. S. government to finance a variety of projects. Capital- These are assets that can be used, either cash or assets, can be used as collateral for operational purposes and or investments, also, Capital can be included to stand for what the owner owns. Capital is money that is used to generate income or make an investment. For example, the money you use to buy shares of a mutual fund is capital that you're investing in the fund. ( Author J. K. et all- 2005) ( Thefreedictionary, 2011) Debt- Any money owed to an individual, company, or other organization. One acquires debt when one borrows money. Generally speaking, one acquires debt for a specific purpose, such as funding a college education or purchasing a house. In business and government, debt is often issued in the form of bonds, which are tradable securities entitling the bearer to repayment at the appropriate time(s). Occasionally, especially for personal loans, debt is issued without interest or other compensation; one simply pays back what was lent. This is exceedingly rare in business and a debtor almost always compensates a creditor with a certain amount of interest,
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