Principles of Finance: Key Concepts and Definitions, Exams of Finance

Download Principles of Finance: Key Concepts and Definitions and more Exams Finance in PDF only on Docsity! Principles of finance -deca Accrual - A type of accounting system that reports income when earned and expenses when incurred Advisory stockbroker - A broker who gives advice on what shares or investments to buy Amortization - Repayment of a loan by monetary installments Arbitrage - The process of buying securities at a low price in one market and then selling them at a higher price in another market Basic point - A hundredth of one percent (.01%) Bear market - A widespread decline in security prices causes bears to believe share prices will fall. Bears sell securities, which they do not presently own hoping they can buy them at a lower price later after the price has fallen Blue chip - A large and creditworthy company Collateral - Property that is offered to secure a loan or other credit and that becomes subject to seizure on default Compliance - The act of accepting and meeting specific standards Compound interest - Interest earned on the principal amount and then accumulated over a period of time Consolidation - The combining of two separate companies into one Corporate bond - Bonds issued by a company Data mining - Sifting through large amounts of data to find the necessary information Deferred shares - Shares that do not receive income until they have reached a certain level Dividends - Money distributed to the owners of a business as profits Economies of scale - The decrease of cost per unit that is a direct result from and increase in production. This can be accomplished because as production increases, the cost of producing each additional item falls. Businesses often buy in volume to take advantage of the discounted rate due to economies of scale Face value - A bond when it a matures Financial institution - An establishment that provides financial services to clients. For example : banks, insurance brokers and investment firms Hedging - Buying one security and selling another with the goal of reducing risk Indemnity insurance - Insurance designed to protect a mortgage lender against the risk of the borrower not being able to repay their loan Junk bond - A high risk bond Maturity - An investment that comes to an end Money market - Trade in short term and low risk securities resulting in dividend earnings Nominal value - The value of security when it is first issued Portfolio - A collection of different investments that make up the total investment holding Risk control - Taking precautionary measures to prevent and minimize risk. Purchasing insurance is just one example Securities - Stocks and shares Share - A slice of ownership in a company