Business

a. Finance: Allocation of resources and funds of the organization in order to maximize the wealth. Firm obtained funds both from external and internal sources at a lower possible cost via sale of stock, bonds, bank loans, etc. Allocation of resources is another aspect of finance as per the needs and the requirement of the business.    

b. Efficient Market: in an efficient market the securities are fairly priced and reflect all the prevailing information with respect to the stock. In addition, any rumor, negative news to the market, etc makes an impression on the stock so in this is manner it is very important that the any particular signals makes an impression on the market on evenly basis.

c. Primary Market: Primary markets are those form of market in which companies raises their newly formed capital. Like General Electric sells its new common stock in order to raise the capital via primary market. Moreover, a company often introduces its IPO in the primary market. In addition, that segments of capital market which deals with new issue of securities and the movements of funds from investors to issuing firms.

d. Secondary Market: Secondary markets are those form of markets in which existing stocks and securities are traded among the investors. Secondary market provides a space where businesses motivate the potential investors to invest in any particular security. The role of secondary market is very pivotal in building the economy of any country and it is the barometer of the economy.

e. Risk: An entrepreneur has viable information with respect to the investment but entrepreneur is uncertain with respect to the future either an entrepreneur gets the low or negative return. There are different forms of risk like interest rate risk, operational risk, etc.  

f. Security: a financial instrument either a stock which reflects the ownership in the company or a bond which indicates a relation with the company by granting a loan to the company. Security is often used a guarantee repayment of debt. It is not essential that there is any particular form of security it exists in different forms like stock, bonds, etc through which an investor participates in the ownership of any company.        

g. Stock: Any individual invest in the business of the company and buying the part of ownership in the business. While the original owner issue the stock in the public. With doing this exercise owner of the business raises its equity finance as well as business wealth. In stock, an individual invest in the business of the company and buying the part of ownership in the business. While the original owner issue the shares in the public. With doing this exercise owner of the business raises its equity finance as well as business wealth. Shares are issued in any form like ordinary share, preference shares, etc. Moreover, equity holders can claim on the residual earnings of the company which is paid out in the form of dividends

h. Bond: a bond is a written agreement between a borrower and lenders in which the borrower agrees to repay a stated sum on a future date and to make periodic interest payments at specified dates (Myers, Brealey and Marcus, 2001).  A bond is a promissory note issued by the firm to the investor. The terms or covenants of the loan arrangement between the firm and the investor are contained in the indenture.

i. Capital: financial assets which is invested in the business in order to generate the revenue and also the profit. The capital mainly exists in the form of cash, inventory, equipment, machinery, etc. Moreover, companies often raises its capital by issuing stocks and bonds in the financial market.

j. Debt: In debt companies sell their bonds, mortgages and notes either in primary or secondary market from which companies generate its finance. Debt is feasible when an entrepreneur wants to fund its assets and knows that the business will produce a positive cash flow stream. In debt financing companies sell their bonds, mortgages and notes either in primary or secondary market from which companies generate its finance. Companies borrow money in order to run their business in smooth and efficient way. In short term debt financing, there are three major sources line credit, revolving credit arrangement and transaction loan. In long term debt financing, firms have a variety of financing alternative such as bonds and debentures.

k. Yield: the actual rate at which bond or security is issued is referred as yield. The yield is very important for an investor in order to assess the rate at which an investor invests in any particular security.

l. Rate of Return: the return of the company either in form of realized or unrealized gained or lost which the company generates throughout the year in relation with their investments (Myers, Brealey and Marcus, 2001). It provides a space for the companies and the investors where they can asses its return and compares it with the past return. It is a very good barometer both for companies and investor to evaluate the return on their investments.        

m. Return on Investment: used to assess the profitability of a firm. The formula of ROI is (annual profit)/ (investment capital). The concept of ROI is applied on project management, real estate, investment made in the stock market, etc. In addition, if an entrepreneur wants an immediate result with respect to its revenue generation, market capitalization and other related matters then ROI provides appropriate results. The major theme and purpose of ROI is to correctly figure out the capital investment decisions.

n. Cash Flow: Cash flow discussed over the company’s operating activities (review the increase and decrease in current assets and current liabilities), investing activities (review over the sale and purchase of fixed assets) and financing activities (review over issuance/payment of loan, issuance/repurchase of share, dividend paid etc) during the year. It also discussed on the in flow and outflow of the cash and also on the cash equivalents (Myers, Brealey and Marcus, 2001).