Topic 1 - Introduction to Finance

Ace your homework & exams now with Quizwiz!

NASDAQ

A computer network where stocks are bought and sold - it is the second largest stock exchange in the world. Typically, technology-related companies will go public through this exchange.

Treasury Securities

A debt instrument (bonds) that is issued by the United States Government in order to raise capital.

Enron

A firm that perpetrated one of the largest corporate frauds in history.

dealer market

A market made up from multiple dealers that hold an inventory of securities and quote prices.

auction market

A market with a physical location and where prices are determined by investors' willingness to pay.

The New York Stock Exchange (NYSE)

A physical trading floor and a computer network where stocks are bought and sold. It is the largest stock exchange in the world

fair return

An acceptable return for a passive investor.

teller

An entry level bank position.

longing

Buying an asset.

financial policy implementation

Incorporating new finance ideas within a firm.

cash management

Managing the day-to-day finance operations of a firm.

tax strategies

Minimizing the taxes a business pays.

investments

One of the three main areas of finance. As its name implies, it involves choosing which assets to invest in.

limit orders

Orders used by investors that are executed only if market prices reach the "limit" price.

market orders

Orders used by investors that time sensitive and are executed on a "first come - first serve basis".

shorting

Selling an asset.

liquidity

The ability to convert an asset to cash quickly without losing significant value

market efficiency

The degree to which prices in a market reflect all available information.

Corporate Finance

The finance function within a business. One of the three main areas of finance. the area of finance that involves maximizing shareholder or owner wealth for privately held companies. also known as managerial finance, financial management, and business finance

percentage returns

The percentage increase (or decrease) in price that is observed by an investor that buys and holds a particular security.

invest

To exchange something in hope of a return. to commit something in hope for a return

current market value

What someone would pay right now for an asset.

human resources (HR)

a business area that is responsible for the firm's people, including recruiting and retaining the firm's employees

private equity (PE)

a category of financial institutions that invest in an entity that is not publicly listed or traded using money received from institutional investors and wealthy individuals

credit analyst

a commercial bank employee with the responsibility to assess the riskiness of lending to borrowers and determining whether or not loans should be extended to potential bank clients an outgoing career

corporate bonds

a debt instrument that is issued by a corporation in order to raise capital

capital

a financial asset that can be used by a firm. an example of capital ma be cash held by a firm or machinery

investment bank

a financial intermediary that offers complex financial transactions such as underwriting, facilitating mergers, and buying and selling financial securities on behalf of large institutions

bonds

a fixed income investment in which an investor loans money to an entity (typically corporate or governmental) which borrows the funds for a defined period of time at a variable or fixed interest rate

syndicate

a group of intermediaries that is used to oversee the issuance of stocks and/or bonds

wills

a legal expression of an individuals wishes concerning the desposition of his or her property after death; legal documents used in estate planning

dollar-cost averaging

a long-term investing strategy in which the investor contributes a set amount into an investment on a set schedule

specialist

a market maker on the New York Stock Exchange that holds an inventory of securities and acts as a liquidity provider to those that wish to buy and sell

asset manager

a professional who makes his or her living managing a portfolio of assets

401(k)

a tax-deterred retirement plan offered by employers to which both the employee and the employer may make contributions

Roth IRA

a tax-sheltered retirement plan individuals can use to avoid taxes on portfolio returns

trusts

an arrangement that allows a third party to hold assets on behalf of a beneficiary or beneficiaries; legal structures used in estate planning

shareholder

an individual (or entity) that holds a share or fraction of ownership in a particular company

earnings

another word for net income

What are the nine finance tracks listed in Careers-in-Finance?

commercial banking, corporate finance, financial planning, insurance, investment banking, money (asset) management, real estate, hedge funds, private equity

agency costs

costs that are incurred when management doesn't act in the best interests of shareholders. The costs that result from the principle-agent problem

estates

everything that a person owns or controls, especially at death; legal structures used in estate planning

returns

how much an investor gets out of an investment divided by how much the investor put into the investment

financial institution

intermediaries, such as banks, that link those that save to those that need to borrow the area of finance that deals with banks insurance companies, pension funds, and the like

initial public offering (IPO)

it is when a company goes out to raise money from the public for the first (initial) time by "offering" a share of its company

goal of the firm

maximize shareholder wealth

debt

money lent by a creditor to provide financing for the borrower

equity

ownership in an asset such as a company. often another name for a stock

mutual funds

portfolios of assets that are professionally managed for others to invest in

venture capital

professionally managed investment capital that is typically invested in very young new ventures

stocks

proof of equity ownership of a firm. gives the holder of the stock the right to vote on matters of the company, and claim to the assets of the company after debt and preferred stock holders have been paid

capital budgeting

short for capital budgeting analysis the process of deciding what assets to buy

marketing

the business area responsible for selling a product or service

operations

the business area that actually produce a company's products or provides a company's services

accounting

the business area that records past financial information and provides this historical data to decision makers in the form of financial statements

operations

the business function responsible for the production of the good or service being sold

marketing

the business function responsible of generating sales

primary market

the financial market where securities (stocks and/or bonds) are first sold

secondary market

the financial market where securities are traded after the initial issuance

money manager

the former term for an asset manager

dollar returns

the increase (or decrease) in price that is observed by an investor that buys and holds a particular security

cash

the most liquid asset on the balance sheet

risk

the possibility that the realized or actual return will differ from our expected return

asset pricing

the process of valuing assets

revenues

the top line of the income statement. the total amount of money a business brings in (before subtracting out any costs)

sales

the top line of the income statement. the total amount of money a business brings in (before subtracting out any costs)

finance

to pay for something

buyout

when an investor purchases a majority share of the stock of a firm


Related study sets

Chapter 1: Introduction to Management and Organizations

View Set

Pathophysiology of Celiac Disease

View Set

Sociology Chapter 5: Self and Identity

View Set

IPAP Biochemistry Exam 1 study guide

View Set

Computers in Business - CGS 2100 Midterm

View Set