- Submitted By: ragibahmed
- Date Submitted: 01/25/2010 8:27 PM
- Category: Miscellaneous
- Words: 960
- Page: 4
- Views: 569

1) Finance: Finance is the art and science of measuring money.

2) Capital Budgeting: The process of planning and managing a firm’s long term investment

3) Capital structure: The mixture of debt and equity maintained by the firm.

4) Working capital: A firm’s short term assets and liabilities.

5) Agency Problem: The possibility of conflict of interest between the stock holders and management of a firm.

6) Primary Market: In a primary market transaction, the corporation is the seller, and the transaction raises money for the corporation. Corporation engages two types of primary market transaction: Public offerings and private placement.

7) Secondary Market: A secondary market transaction involves one owner or creditor selling to another. Therefore the secondary market transaction provides the means for transferring ownership of corporate securities.

8) Time Value of Money: The time value of money refers to the fact that a dollar in hand today is worth more than a dollar promised at some time in the future.

9) Compounding: The process of accumulating interest on an investment over time to earn more interest.

10) Discounting: Calculation of the present value of some future amount.

11) Discount Rate: The rate used to calculate the present value of future cash flow.

12) Present Value: The current value of future cash flow discounted at the appropriate discount rate.

13) Future Value: The amount of an investment is worth after one or more period.

14) Annuity: Annuity is a series of equal payment for a specific period. It is a level stream of cash flows for a fixed period of time.

15) Ordinary Annuity: A series of constant or level cash flows that occur at the end of each period for some fixed number of period.

16) Annuity Due: An annuity for which the cash flows occur at the beginning of the period.

Perpetuity: An annuity in which the cash flows continue forever. Perpetuity is also called consol (in Canada & UK). Preferred stock is an important example...