FIN 370 LIST OF DEFINITIONS

SAMPLE

Efficient market- efficient markets hypothesis, a strategy of shifting one's portfolio in response to public information, such as changes in oil prices, will not result in higher expected returns. In an efficient market, stock prices are forward looking and reflect all available public information about future profitability.

Primary market- A primary market is a market in which new, as opposed to previously issued, securities are bought and sold for the first time.

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Create a list of definitions for the following terms and identify their roles in finance.

Finance- Finance is the study of how people and businesses evaluate investments and raise capital to fund them. Our interpretation of an investment is quite broad. The four principles of finance:

Principle 1: Money Has a Time Value

Principle 2: There Is a Risk-Return Tradeoff

Principle 3: Cash Flows Are the Source of Value

Principle 4: Market Prices Reflect Information, which underlies all financial decisions.