The Terms and Roles of Finance

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Terms and Roles of Finance Bonnie Espanol FIN/370 January 13, 2014 Richard Putnam Terms and Roles of Finance • Finance Finance is the study of how organizations and people handle concerns associated with money and the markets and how to generate a profit in the future. The role of finance is essentially about the management and analysis of information about money and how to manage money for an organization. • Efficient market Efficient market is described as a market whose prices immediately respond to new information is announced to all contributors involved. The role of efficient market is to attempt to efficiently provide information publicly and accurately with market prices. • Primary market The primary market is the…show more content…
• Capital Capital is defined as any money invested in an organization this includes any financial assets and the value of the assets the organization has. The role of capitol is to provide financial growth in long term investments. • Debt The term for debt in money that has been borrowed and must be repaid either in short-term or long-term agreements between parties. The role of debt is to provide funds for operations for organizations. • Yield The term for yield is the percentage of an income return paid on with an investment by interest or dividends. The role of yield is to pay the annual income earned on money invested by the investor. • Rate of return The term for rate of return is an increase or a decrease on an investment over a stipulated period of time. Rate of return is also expressed as a percentage increase of the total amount invested over the original cost of the investments. The role of the rate of return is to measure the efficiency of an investment and to determine how valuable the investment will be. • Return on investment The term for return on investments is a performance measure to evaluate or compare investments to different investments. The role of return on investments provides information when an investment should be made or not. The higher the return on investment the better the investment should be made. • Cash flow The term cash flow is any money that comes in or goes out in an
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