Financial Terms

Financial Terms

Financial Terms
The paper will describe the definitions and roles of certain financial terms. Managing a business today requires an understanding of the meanings of financial terms and how those theories affect the operation of a business. Business owners and managers make financial decisions that affect the success of the business and in doing so they need to understand the basic concepts of finance. The more knowledge the decision makers have the better decision making will be.  
Terms Defined
Finance
Finance involves financial management investments and institutions, which can include money, banking, credit, investments, and assets. Finance is anything to do with money and the market. Financial management is concerned with the maintenance and creation of economic value or wealth. The function of finance allocates resources including acquiring, investing, and managing of resources (Keown, Martin, Petty, & Scott Jr, 2005).
Efficient Market
A market in which the values of securities at any instant in time fully reflect all available information which results in the market value and the intrinsic value being the same. A market in which the values of all assets and securities at any instant in time fully reflect all available public information. Market in which prices correctly reflect all relevant information. A market in which security prices reflect all available information and adjust instantly to any new information (Keown, et al. 2005).
Primary Market
Transactions in securities offered for the first time to potential investors. A primary market is a market in which new securities are traded. This is the only time that the issuing firm receives money for its stock. A company who first offers their stock on the market does so to obtain money for the stock. Investors for the new stock offer money the first time the stock is offered. After the initial purchases, any other trading is done in the secondary market. Two different types of offerings exist in...