Finance Case

Finance is the study of how people and businesses evaluate investments and raise capital to fund them. The role of finance is just the definition. Efficient market is the market in which all the available information is fully incorporated into securities prices and the returns investors will earn on their investments cannot be predicted. Efficient market is not accurate information, but can help show the prices. Primary market is a market in which new, as opposed to previously issued, securities are bought and sold for the first time. The role of primary market in finance is to individuals to finance their businesses firms issue new securities to raise money to fund them. Secondary market is where all subsequent trading of previously issued securities it has sold are simply being transferred from one investor to another. The role of secondary market in finance is shareholders of firms that sell their securities actually receive the money raised. Risk is the chance of a different outcome of what is expected from an investment return. The role of risk in finance is great because this is evaluating investments. Security is a negotiable instrument that represents a financial claim. This is also a form of ownership such as stock or a debt agreement. The role of security in finance is it allows businesses and individuals investors to trade the securities issued by public corporations. A stock is an instrument that signifies an ownership position in a corporation. Stock can help businesses get money, but will allow individuals to have some say in the business. A bond is a long-term ten years or more promissory notes issued by a borrower, promising to pay the owner of the security a predetermined amount of interest each year. The role of bond in finance is help businesses get money that they need. Capital refers to the market for long-term financial instruments. The role of capital in finance is raising long-term funds for government's banks, and corporations while providing a platform for the trading of securities. Debt is what a firm owes money. The role of debt is to help finance a company. Yield is the interest rate provided by bonds or from stock dividends. This will show how much interest will be earned or paid. Rate of return is the gain or loss of an investment. Rate's role in finance is this can either make or loss individuals or businesses money. Return of investment is a performance measure used to evaluate the efficiency