Create a list of definitions of the following terms and identify their roles in finance:
Finance: This is the study of how people and businesses evaluate investments and raise capital to fund them. It is also considered to be the science of the management of money and other assets. One example would be family personal finances, taking what is being made versus what is being spent, and evaluating that to purchase vehicles, homes or other family needs.
Efficient market: This is a market whose prices quickly respond to the announcement of new information. One example would be the iphone. As soon as the new iphone 5 was released today, the iphone 4s is now on discount. Another great example ...view middle of the document...
Securities are broadly classified as debt securities (bonds) and equity securities (shares common stock) one example I have for this is a stock that my husband and I own, we have a piece a paper that is security for owning it.
Stock: An instrument that signifies an ownership position in a corporation. One example is Mark Zuckerberg owning stock in Facebook now that it is a publicly traded company.
Bond: A long-term (10 or more) promissory note issued by a borrower, promising to pay the owner of the security a predetermined amount of interest each year. One great example is purchasing a bond at a certain cost, and it “maturing” over time.
Capital: Capital is just another term to use as money invested into a firm. One example would be an investor putting capital into a business as part-owner.
Debt: Money that has been borrowed and must be repaid. One example of this would be a home loan, money that was borrowed from a bank to purchase a home that must be paid back.
Yield: Yield is the money that investors receive from an investment. The yield is calculated as the coupons or dividends the...