Finance Today
Finance is what handles the matters related to money and the market. Finance is the function in a business responsible for acquiring funds for the company or
business, managing funds within that company or business, and planning for the expenditure of funds on various assets. It is important to effectively manage finances with long and short term goals. We need finances to start up a company or business as well as keeping it going. Without finances, a carefully calculated business plan, the company or business has little chance for survival. Such as when some element of the finance process breaks down companies go out of business and the economy moves into recession. For example, if a major bank loses a significant amount of money and faces the risk of insolvency, other banks and corporate customers will stop lending or depositing money to the problem bank. It will then stop lending to its customers and they will not be able to purchase the goods or pay the bills for which they were seeking funding. The flow of money throughout the financial system slows down or stops as a result. It is like a snowball effect. It is important to have someone in a business or company that manages the money. Most companies or businesses have a finance department that typically involves planning,organizing, auditing, accountingfor and controllingtheir business or company'sfinances. This department also usually produces the company's financial statements. In general finances is the process of creating, moving and using money, enabling the flow of money through a company or business in much the same way it facilitates global money flow. Money is created by the sales force when goods or services the company produces are sold, which then flows into production where it is spent to manufacture more products to be sold. What money remains is used to pay salaries and fund the administrative expenses of the company.
business, managing funds within that company or business, and planning for the expenditure of funds on various assets. It is important to effectively manage finances with long and short term goals. We need finances to start up a company or business as well as keeping it going. Without finances, a carefully calculated business plan, the company or business has little chance for survival. Such as when some element of the finance process breaks down companies go out of business and the economy moves into recession. For example, if a major bank loses a significant amount of money and faces the risk of insolvency, other banks and corporate customers will stop lending or depositing money to the problem bank. It will then stop lending to its customers and they will not be able to purchase the goods or pay the bills for which they were seeking funding. The flow of money throughout the financial system slows down or stops as a result. It is like a snowball effect. It is important to have someone in a business or company that manages the money. Most companies or businesses have a finance department that typically involves planning,organizing, auditing, accountingfor and controllingtheir business or company'sfinances. This department also usually produces the company's financial statements. In general finances is the process of creating, moving and using money, enabling the flow of money through a company or business in much the same way it facilitates global money flow. Money is created by the sales force when goods or services the company produces are sold, which then flows into production where it is spent to manufacture more products to be sold. What money remains is used to pay salaries and fund the administrative expenses of the company.
Finance Careers
Some finace careers are...
1.) Investment Banking
2.) Economic Manager
3.) Collections Represenitive
4.) Payroll Administrator
5.) Claims Examiner
1.) Investment Banking
2.) Economic Manager
3.) Collections Represenitive
4.) Payroll Administrator
5.) Claims Examiner
Finance Mentor: Tom Blair-Vice President Managing Director for Business Developement and Strategic Planning
Objectives (For Finance)
What do you want to get out of this interview? What would make it successful for you?
My goal to get out of this interview is to understand the difference between accounting and finance. I understand they both work with numbers and help a company financially, but what role do they do that makes them different? How do they individually impact a company? My other goal is the same as the others interviews which is to gain a better understanding of financing.
To make this successful I plan on getting as much information as I can from the interviewee and then ask more questions that are not mentioned in the worksheet to get more depth. I know the more information I get the more I will learn and understand.
Marketplace
What are the projections for this type of work or industry? Is it stable, growing, declining?
According to my mentor the there are not as many jobs for the finance field because of the bad economy. In general he believes that the bad economy has not helped the business world. It is hard to get a job unless you can get yourself in the door somehow or get yourself known. He also explains that there are very few people needed to work in finances field for a company. He used his company for an example. My mentor works with a big company called Purina, which also owns other little small companies such as Nestle. There are a few positions needed for someone who is in the finance field.
What are the key trends or issues? New developments? Key challenges?
A key trend my mentor mentioned which can also be an issue is the federal government. The government helps determine what would be a trend, but it all depends on what the government does to with laws or the changing of taxes and stocks. It makes it a bit challenging because one day it may be fine but the next day it is not. The government in general plays an impact in the finances field. The value of a dollar has gone up. This trend is similar to the accounting field. Another trend is the growth of the internet and the use of technology. The different devices and software that could be used help financing to be faster and more efficient. The internet and technology has been a development in the financing world.
What and where are the opportunities?
According to my mentor there are opportunities for someone in the finance field to go into the banking industry, become an economic manager, or payroll administrator. That is what I help at my current job now sometimes—I work on doing the company’s payroll as well as the sub-contractors. In general though with this bad economy it has become hard to find a position in the finances field.
What are typical salaries in this type of job, entry-level to experienced? What are the opportunities for career growth?
Someone with a Bachelor can get a starting salary of 45-50 thousand dollars a years, and with an MBA added 20 thousand dollars to the starting salary. Someone experienced can receive up to 250 thousand dollars a year with bonuses.
There are a lot of opportunities for career growth. My mentor explains that someone can start off in a position, but over time branch out to something they love or new. For example my mentor started out as a marketer, but he became interested in a job that no one really did at his company. He looked into it and eventually that became his full time job. An important job and that is how he got into financing.
Entry Position
When and how did [my mentor] get involved in this work?
My mentor graduated with a finances degree with economics as his minor, but he did not start out in a finance career right away. He ended up getting into marketing with a company called Purina, but after working with the company for a while he eventually moved over to the finance field. He explained it started out with him noticing some financial roles not being done by anyone. He was curious and looked into it. Before he knew it he had assumed the roles of those forgotten positions and became successful at what he does which is business development and strategic planning. To be more specific he is the VP managing director for business development and strategic planning. His job entails working with companies starting from scratch, work with venture capital, and finances strategic planning.
What was [my mentor’s] training and background? Is this typical for people in [my mentor’s] position?
Like I mentioned in the previous question he got his training and background from school and the company he works with currently. He like working with numbers and improve the development in a company. I liked how my mentor described financing is glorified accounting.
My mentor believes it is pretty typical for someone to start out in one field before switching over to another. Whatever way is easiest to get your foot in the door. He mentioned it is like discovering your major. It is not unusual for a college student to change their major three or four times before they graduate. It is typical for their interest to change or they find a better opportunity for them. It is not too common for someone to jump into their permanent career. It takes awhile to build up to it or find it.
How important are specific credentials for entry or success?
According to my mentor it is important to have a bachelors but it would be even better with a MBA. Know how to use excel, word document, and powerpoint.
Job Specifics
What’s a typical day like for you or someone in a similar position?
A typical day at work for my mentor is that he goes to work around 8 am. He then begins to prep for the day by making phone calls, research, doing his homework, editing and looking over presentation he has to give. About 9 am he heads to his first meeting of the day and is in meetings until noon. He gets lunch for an hour to an hour and a half before finishing the rest of the work day in meetings, making preparations for tomorrow, doing some more researching, and homework. On a typical day he gets off work around 5:30-6 pm.
What do you like most about your work?
What my mentor likes most about his work is being the boss. He jokingly said that is because he likes to boss people around but other than that he likes the being in the leadership role. He likes to help run the new companies that are branches off of Purina. He also mentioned he loves to learn new things and managements styles. He says he is always a curious person and wants to learn as much as he can to satisfy his curiosity.
What do you like least?
What my mentor like least about his job is the cooperate bureaucracy and writing standard reports. He explains that he has a hard time following the rules all the time. If something does not work out he looks for a solution that will work for the company even if it does not necessarily follow the rules. He struggles with people who are by the book. He knows that it is good to follow the book but not ever situation can be handled by the book. With the standard reports he general explained he does not like to write out reports. It is like writing a paper and that is something he never really enjoyed.
What talents or skills does [my mentor] think are the most crucial to success in this financing?
Before my mentor gave me an answer he explained that he sees talents as something someone has before entering the job world and skills is something that can be learned as well as developed. Some talents my mentor listed are being comfortable and good with numbers, can come up with solutions (think outside the box), deal with people, work with them, and have good complexity. I liked how he mentioned that being a member of the Church of Jesus Christ of Latter-Day Saints has developed the person he is today. The skills he listed were continued education in finances, have good communication with other that is effective and clear, and get along with people and mange people.
What attitudes or values are important?
A good attitude for towards the position my mentor has mentioned is to not be afraid to take charge and make decisions. They should be confident and positive in what they do. Also they should have be engaged and have a type A personality.
My mentor believes important values that someone should have is integrity, honesty, trustworthy, and be willing to ask questions to gain knowledge. Those values may seem like a given but they are important to have according to my mentor which I agree with him. It is important to be honest with yourself as well as others. It helps build trust and your integrity. It is important to have integrity in what we do. As well as it is important to be trusted and to trust others.
Who doesn’t do well in this type of work?
Someone who would not do well in finances according to my mentor would be a caring, sensitive, nurturing person. They need someone who is aggressive and tough someone who is not afraid to take charge and can handle change along with making decisions. They need someone on the front lines and who is a good worker. If they cannot communicate clearly or work well with others that can become a problem waiting to happen.
How do you advance or get promoted in financing?
According to my mentor you can get promoted or advance through hard work and going the extra mile. Willing to try new things and show you can take charge. In general show the company what you can do that will benefit them to make more money, develop the company, and keep the company going. This process does not usually happen overnight. It takes years of experience, hard work and dedication. My mentor believes dedication and the desire are key to being successful in a company to be promoted or advanced.
Recommendations
Would my background be appropriate for this type of work?
I gave my mentor a short summary of my background and he thought I could go into this field of financing if wanted too. Mainly because I am a dedicated hard work who is will to take a challenge and find a way to overcome it. He also thought that my little bit of experience I get from work helping with a few financial issues was a good start for a potential permanent job in the finance field.
What would you recommend I do if I want to go into this field?
My mentor recommended taking as many classes as I can to learn and gather up as much information to help me understand financing. He also recommended getting an internship as well as much job experiences I can find. If needs be go and observe someone in the industry to gain a little bit of experiences; to see what they do and operate things. Every company is different. The last thing he recommended was to get your MBA. It will be helpful in getting a job because you are more valuable.
Are there other jobs similar to your that you would suggest I consider?
He said he could not think of any at that time.
Can you recommend other people I can talk to, or other resources I can check out?
He recommended I could talk to few of his other friends who are in the finance field that work for other smaller companies. There business world is different than a big cooperation. He also referred to a website that could help discover ourselves. Like what I have learned from this class my mentor mentioned that we need to discover ourselves before we find our career or to help us pick our career. The website is called MyersBriggs. The website is a personality test to help discover ourselves. I like how my mentor explained that our personalities play a big role in a job we do.
Knowing what you know now, would you approach this career (or job) in the same way? If not, what would you do differently?
Even though I have learned new things I think I would approach this career the same way from when I started. I would learn about it first and then get or research a little bit about this field. After that I would try to get some experience and get my foot in the door for financing.
What do you want to get out of this interview? What would make it successful for you?
My goal to get out of this interview is to understand the difference between accounting and finance. I understand they both work with numbers and help a company financially, but what role do they do that makes them different? How do they individually impact a company? My other goal is the same as the others interviews which is to gain a better understanding of financing.
To make this successful I plan on getting as much information as I can from the interviewee and then ask more questions that are not mentioned in the worksheet to get more depth. I know the more information I get the more I will learn and understand.
Marketplace
What are the projections for this type of work or industry? Is it stable, growing, declining?
According to my mentor the there are not as many jobs for the finance field because of the bad economy. In general he believes that the bad economy has not helped the business world. It is hard to get a job unless you can get yourself in the door somehow or get yourself known. He also explains that there are very few people needed to work in finances field for a company. He used his company for an example. My mentor works with a big company called Purina, which also owns other little small companies such as Nestle. There are a few positions needed for someone who is in the finance field.
What are the key trends or issues? New developments? Key challenges?
A key trend my mentor mentioned which can also be an issue is the federal government. The government helps determine what would be a trend, but it all depends on what the government does to with laws or the changing of taxes and stocks. It makes it a bit challenging because one day it may be fine but the next day it is not. The government in general plays an impact in the finances field. The value of a dollar has gone up. This trend is similar to the accounting field. Another trend is the growth of the internet and the use of technology. The different devices and software that could be used help financing to be faster and more efficient. The internet and technology has been a development in the financing world.
What and where are the opportunities?
According to my mentor there are opportunities for someone in the finance field to go into the banking industry, become an economic manager, or payroll administrator. That is what I help at my current job now sometimes—I work on doing the company’s payroll as well as the sub-contractors. In general though with this bad economy it has become hard to find a position in the finances field.
What are typical salaries in this type of job, entry-level to experienced? What are the opportunities for career growth?
Someone with a Bachelor can get a starting salary of 45-50 thousand dollars a years, and with an MBA added 20 thousand dollars to the starting salary. Someone experienced can receive up to 250 thousand dollars a year with bonuses.
There are a lot of opportunities for career growth. My mentor explains that someone can start off in a position, but over time branch out to something they love or new. For example my mentor started out as a marketer, but he became interested in a job that no one really did at his company. He looked into it and eventually that became his full time job. An important job and that is how he got into financing.
Entry Position
When and how did [my mentor] get involved in this work?
My mentor graduated with a finances degree with economics as his minor, but he did not start out in a finance career right away. He ended up getting into marketing with a company called Purina, but after working with the company for a while he eventually moved over to the finance field. He explained it started out with him noticing some financial roles not being done by anyone. He was curious and looked into it. Before he knew it he had assumed the roles of those forgotten positions and became successful at what he does which is business development and strategic planning. To be more specific he is the VP managing director for business development and strategic planning. His job entails working with companies starting from scratch, work with venture capital, and finances strategic planning.
What was [my mentor’s] training and background? Is this typical for people in [my mentor’s] position?
Like I mentioned in the previous question he got his training and background from school and the company he works with currently. He like working with numbers and improve the development in a company. I liked how my mentor described financing is glorified accounting.
My mentor believes it is pretty typical for someone to start out in one field before switching over to another. Whatever way is easiest to get your foot in the door. He mentioned it is like discovering your major. It is not unusual for a college student to change their major three or four times before they graduate. It is typical for their interest to change or they find a better opportunity for them. It is not too common for someone to jump into their permanent career. It takes awhile to build up to it or find it.
How important are specific credentials for entry or success?
According to my mentor it is important to have a bachelors but it would be even better with a MBA. Know how to use excel, word document, and powerpoint.
Job Specifics
What’s a typical day like for you or someone in a similar position?
A typical day at work for my mentor is that he goes to work around 8 am. He then begins to prep for the day by making phone calls, research, doing his homework, editing and looking over presentation he has to give. About 9 am he heads to his first meeting of the day and is in meetings until noon. He gets lunch for an hour to an hour and a half before finishing the rest of the work day in meetings, making preparations for tomorrow, doing some more researching, and homework. On a typical day he gets off work around 5:30-6 pm.
What do you like most about your work?
What my mentor likes most about his work is being the boss. He jokingly said that is because he likes to boss people around but other than that he likes the being in the leadership role. He likes to help run the new companies that are branches off of Purina. He also mentioned he loves to learn new things and managements styles. He says he is always a curious person and wants to learn as much as he can to satisfy his curiosity.
What do you like least?
What my mentor like least about his job is the cooperate bureaucracy and writing standard reports. He explains that he has a hard time following the rules all the time. If something does not work out he looks for a solution that will work for the company even if it does not necessarily follow the rules. He struggles with people who are by the book. He knows that it is good to follow the book but not ever situation can be handled by the book. With the standard reports he general explained he does not like to write out reports. It is like writing a paper and that is something he never really enjoyed.
What talents or skills does [my mentor] think are the most crucial to success in this financing?
Before my mentor gave me an answer he explained that he sees talents as something someone has before entering the job world and skills is something that can be learned as well as developed. Some talents my mentor listed are being comfortable and good with numbers, can come up with solutions (think outside the box), deal with people, work with them, and have good complexity. I liked how he mentioned that being a member of the Church of Jesus Christ of Latter-Day Saints has developed the person he is today. The skills he listed were continued education in finances, have good communication with other that is effective and clear, and get along with people and mange people.
What attitudes or values are important?
A good attitude for towards the position my mentor has mentioned is to not be afraid to take charge and make decisions. They should be confident and positive in what they do. Also they should have be engaged and have a type A personality.
My mentor believes important values that someone should have is integrity, honesty, trustworthy, and be willing to ask questions to gain knowledge. Those values may seem like a given but they are important to have according to my mentor which I agree with him. It is important to be honest with yourself as well as others. It helps build trust and your integrity. It is important to have integrity in what we do. As well as it is important to be trusted and to trust others.
Who doesn’t do well in this type of work?
Someone who would not do well in finances according to my mentor would be a caring, sensitive, nurturing person. They need someone who is aggressive and tough someone who is not afraid to take charge and can handle change along with making decisions. They need someone on the front lines and who is a good worker. If they cannot communicate clearly or work well with others that can become a problem waiting to happen.
How do you advance or get promoted in financing?
According to my mentor you can get promoted or advance through hard work and going the extra mile. Willing to try new things and show you can take charge. In general show the company what you can do that will benefit them to make more money, develop the company, and keep the company going. This process does not usually happen overnight. It takes years of experience, hard work and dedication. My mentor believes dedication and the desire are key to being successful in a company to be promoted or advanced.
Recommendations
Would my background be appropriate for this type of work?
I gave my mentor a short summary of my background and he thought I could go into this field of financing if wanted too. Mainly because I am a dedicated hard work who is will to take a challenge and find a way to overcome it. He also thought that my little bit of experience I get from work helping with a few financial issues was a good start for a potential permanent job in the finance field.
What would you recommend I do if I want to go into this field?
My mentor recommended taking as many classes as I can to learn and gather up as much information to help me understand financing. He also recommended getting an internship as well as much job experiences I can find. If needs be go and observe someone in the industry to gain a little bit of experiences; to see what they do and operate things. Every company is different. The last thing he recommended was to get your MBA. It will be helpful in getting a job because you are more valuable.
Are there other jobs similar to your that you would suggest I consider?
He said he could not think of any at that time.
Can you recommend other people I can talk to, or other resources I can check out?
He recommended I could talk to few of his other friends who are in the finance field that work for other smaller companies. There business world is different than a big cooperation. He also referred to a website that could help discover ourselves. Like what I have learned from this class my mentor mentioned that we need to discover ourselves before we find our career or to help us pick our career. The website is called MyersBriggs. The website is a personality test to help discover ourselves. I like how my mentor explained that our personalities play a big role in a job we do.
Knowing what you know now, would you approach this career (or job) in the same way? If not, what would you do differently?
Even though I have learned new things I think I would approach this career the same way from when I started. I would learn about it first and then get or research a little bit about this field. After that I would try to get some experience and get my foot in the door for financing.
Key Finance Terms
Return on Investment (ROI): The earning power of assets measured as the ratio of the net income (profit less depreciation) to the average capital employed (or equity capital) in a company or project. Expressed usually as a percentage, return on investment is a measure of profitability that indicates whether or not a company is using its resources in an efficient manner. For example,
if the long-term return on investment of a company is lower than its cost-of-capital, then the company will be better off by liquidating its assets and depositing the proceeds in a bank. Also called rate of return, or yield.
Net Present Values: The difference between the present value of the futurecash flows from an investment and the amount of investment. Present value of the
expected cash flows is computed by discounting them at the required rate of return.
Stocks: A share of a company held by an individual or group. Corporations raise capital by issuing stocks and entitle the stock owners (shareholders) to partial ownership of the corporation. Stocks are bought and sold on what is called an exchange. There are several types of stocks and the two most typical forms are preferred stock and common stock. See also share.
Bonds: A debt instrument issued for a period of more than one year with the purpose of raising capital by borrowing. The Federal government, states, cities, corporations, and many other types of institutions sell bonds. Generally, a bond is a promise to repay the principal along with interest (coupons) on a specified date (maturity). Some bonds do not pay interest, but all bonds require a repayment of principal. When an investor buys a bond, he/she becomes a creditor of the issuer. However, the buyer does not gain any kind of ownership rights to the issuer, unlike in the case of equities. On the hand, a bond holder has a greater claim on an issuer's income than a shareholder in the case of financial distress (this is true for all creditors). Bonds are often divided into different categories based on tax status, credit quality, issuer type, maturity and secured/unsecured (and there are several other ways to classify bonds as well). U.S. Treasury bonds are generally considered the safest unsecured bonds, since the possibility of the Treasury defaulting on payments is almost zero. The yield from a bond is made up of three components: coupon interest, capital gains and interest on interest (if a bond pays no coupon interest, the only yield will be capital gains). A bond might be sold at above or below par (the amount paid out at maturity), but the market price will approach par value as the bond approaches maturity. A riskier bond has to provide a higher payout to compensate for that additional risk. Some bonds are tax-exempt, and these are typically issued by municipal, county or state governments, whose interest payments are not subject to federal income tax, and sometimes also state or local income tax.
Stockholders: An individual, group, or organization that holds one or more shares in a company, and in whose name the share certificate is issued. Also called shareholder: An individual, group, or organization that owns one or more shares in a company, and in whose name the share certificate is issued.
Government Securities: Bonds, notes, and other debt instruments sold by a government to finance its borrowings. These are generally long-termsecurities with the highest market ratings.
Mutual Fund: An investment vehicle managed by finance professionals that raises capital by selling shares (called units) in a chosen and balanced set of securities to the public. A mutual fund's capital is invested in a group (portfolio) of corporate securities, commodities, options, etc., that match the fund's objectivesdetailed in its prospectus. The level of a mutual fund's income from its portfolio determines the daily market value (called net asset value) at which its units are redeemable on any business day, and the dividend paid to its unit holders. Mutual funds are of two main types: (1) open end fund, where the capitalization of the fund is not fixed and more units may be sold at any time to increase its capital base, (2) closed end fund, where capitalization is fixed and limited to the number of units authorized at the fund's inception (or as formally altered thereafter). Mutual funds usually charge a management fee (typically between 1 and 2 percent of the fund's annual earnings) and may also levy other fees and sales commission (called 'load') if units are bought from a financial advisor. The term mutual fund, used mainly in the US, has no legal bearing, and may be referred to as unit investment trust or a unit trust in the UK and other British Common wealth countries.
SEC: (Securities and Exchange Commission) The primary federal regulatory agency for the securities industry, whose responsibility is to promote full disclosure and to protect investors against fraudulent and manipulative practices in the securities markets. The securities and Exchange Commission enforces, among other acts, the Securities Act of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company Act of 1940 and the Investment Advisers Act. The supervision of dealers is delegated to the self-regulatory bodies of the exchanges. The securities and Exchange Commission is an independent, quasi-judiciary agency. It has five commissioners, each appointed for a five year term that is staggered so that one new commissioner is being replaced every year. No more than three members of the commission can be of a single political party. The securities and Exchange Commission is comprised of four basic divisions. The Division of Corporate Finance is in charge of making sure all publicly traded companies disclose the required financial information to investors. The Division of Market Regulation oversees all legislation involving brokers and brokerage firms. The Division of Investment Management regulates the mutual fund and investment advisor industries. And the Division of Enforcement enforces the securities legislation and investigates possible violations.
Stock Markets: a place where shares are bought and sold, i.e. a stock exchange
Inital Public Offering (IPO): First offering of a firms' stock (shares) on the stockmarket, at the time it 'goes public.' Because a stockmarket usually values the stock on the expectations of the firm's future growth and income, IPOs are typically an opportunity for the founders and other early investors to make high profits by cashing their stockholdings.
Venture Capital: Startup or growth equity capital or loan capital provided by private investors (the venture capitalists) or specialized financial institutions (development finance houses or venture capital firms). Also called risk capitalInterest Rate: The annualized cost of credit or debt-capital computed as the percentage ratio of interest to the principalEach bank can determine its own interest rate on loans but, in practice, local rates are about the same from bank to bank. In general, interest rates rise in times of inflation, greater demand for credit, tight money supply, or due to higher reserve requirements for banks. A rise in interest rates for any reason tends to dampen business activity (because credit becomes more expensive) and the stock market (because investors can get better returns from bank deposits or newly issued bonds than from buying shares).
Dow Jones Industrial Average: Price weighted (see weight) average of 30 actively traded shares of the blue chip US industrial corporations listed on the New York Stock Exchange. The trend in the movement of the market value of these shares is considered to be an indicator of the movement of the entire US stockmarket. The corporations included in DJIA change from time to time and generally represent about 20 percent of the market value of all shares traded on NYSE. DJIA is quoted in points not in dollars and is the world’s best-known stockmarket index. It was published first time on May 26, 1896 by the US journalist Charles Dow (1851-1902), founder of the Dow Jones & Co. and the Wall Street Journal, and propounder of the Dow theory.
Net Present Values: The difference between the present value of the futurecash flows from an investment and the amount of investment. Present value of the
expected cash flows is computed by discounting them at the required rate of return.
Stocks: A share of a company held by an individual or group. Corporations raise capital by issuing stocks and entitle the stock owners (shareholders) to partial ownership of the corporation. Stocks are bought and sold on what is called an exchange. There are several types of stocks and the two most typical forms are preferred stock and common stock. See also share.
Bonds: A debt instrument issued for a period of more than one year with the purpose of raising capital by borrowing. The Federal government, states, cities, corporations, and many other types of institutions sell bonds. Generally, a bond is a promise to repay the principal along with interest (coupons) on a specified date (maturity). Some bonds do not pay interest, but all bonds require a repayment of principal. When an investor buys a bond, he/she becomes a creditor of the issuer. However, the buyer does not gain any kind of ownership rights to the issuer, unlike in the case of equities. On the hand, a bond holder has a greater claim on an issuer's income than a shareholder in the case of financial distress (this is true for all creditors). Bonds are often divided into different categories based on tax status, credit quality, issuer type, maturity and secured/unsecured (and there are several other ways to classify bonds as well). U.S. Treasury bonds are generally considered the safest unsecured bonds, since the possibility of the Treasury defaulting on payments is almost zero. The yield from a bond is made up of three components: coupon interest, capital gains and interest on interest (if a bond pays no coupon interest, the only yield will be capital gains). A bond might be sold at above or below par (the amount paid out at maturity), but the market price will approach par value as the bond approaches maturity. A riskier bond has to provide a higher payout to compensate for that additional risk. Some bonds are tax-exempt, and these are typically issued by municipal, county or state governments, whose interest payments are not subject to federal income tax, and sometimes also state or local income tax.
Stockholders: An individual, group, or organization that holds one or more shares in a company, and in whose name the share certificate is issued. Also called shareholder: An individual, group, or organization that owns one or more shares in a company, and in whose name the share certificate is issued.
Government Securities: Bonds, notes, and other debt instruments sold by a government to finance its borrowings. These are generally long-termsecurities with the highest market ratings.
Mutual Fund: An investment vehicle managed by finance professionals that raises capital by selling shares (called units) in a chosen and balanced set of securities to the public. A mutual fund's capital is invested in a group (portfolio) of corporate securities, commodities, options, etc., that match the fund's objectivesdetailed in its prospectus. The level of a mutual fund's income from its portfolio determines the daily market value (called net asset value) at which its units are redeemable on any business day, and the dividend paid to its unit holders. Mutual funds are of two main types: (1) open end fund, where the capitalization of the fund is not fixed and more units may be sold at any time to increase its capital base, (2) closed end fund, where capitalization is fixed and limited to the number of units authorized at the fund's inception (or as formally altered thereafter). Mutual funds usually charge a management fee (typically between 1 and 2 percent of the fund's annual earnings) and may also levy other fees and sales commission (called 'load') if units are bought from a financial advisor. The term mutual fund, used mainly in the US, has no legal bearing, and may be referred to as unit investment trust or a unit trust in the UK and other British Common wealth countries.
SEC: (Securities and Exchange Commission) The primary federal regulatory agency for the securities industry, whose responsibility is to promote full disclosure and to protect investors against fraudulent and manipulative practices in the securities markets. The securities and Exchange Commission enforces, among other acts, the Securities Act of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company Act of 1940 and the Investment Advisers Act. The supervision of dealers is delegated to the self-regulatory bodies of the exchanges. The securities and Exchange Commission is an independent, quasi-judiciary agency. It has five commissioners, each appointed for a five year term that is staggered so that one new commissioner is being replaced every year. No more than three members of the commission can be of a single political party. The securities and Exchange Commission is comprised of four basic divisions. The Division of Corporate Finance is in charge of making sure all publicly traded companies disclose the required financial information to investors. The Division of Market Regulation oversees all legislation involving brokers and brokerage firms. The Division of Investment Management regulates the mutual fund and investment advisor industries. And the Division of Enforcement enforces the securities legislation and investigates possible violations.
Stock Markets: a place where shares are bought and sold, i.e. a stock exchange
Inital Public Offering (IPO): First offering of a firms' stock (shares) on the stockmarket, at the time it 'goes public.' Because a stockmarket usually values the stock on the expectations of the firm's future growth and income, IPOs are typically an opportunity for the founders and other early investors to make high profits by cashing their stockholdings.
Venture Capital: Startup or growth equity capital or loan capital provided by private investors (the venture capitalists) or specialized financial institutions (development finance houses or venture capital firms). Also called risk capitalInterest Rate: The annualized cost of credit or debt-capital computed as the percentage ratio of interest to the principalEach bank can determine its own interest rate on loans but, in practice, local rates are about the same from bank to bank. In general, interest rates rise in times of inflation, greater demand for credit, tight money supply, or due to higher reserve requirements for banks. A rise in interest rates for any reason tends to dampen business activity (because credit becomes more expensive) and the stock market (because investors can get better returns from bank deposits or newly issued bonds than from buying shares).
Dow Jones Industrial Average: Price weighted (see weight) average of 30 actively traded shares of the blue chip US industrial corporations listed on the New York Stock Exchange. The trend in the movement of the market value of these shares is considered to be an indicator of the movement of the entire US stockmarket. The corporations included in DJIA change from time to time and generally represent about 20 percent of the market value of all shares traded on NYSE. DJIA is quoted in points not in dollars and is the world’s best-known stockmarket index. It was published first time on May 26, 1896 by the US journalist Charles Dow (1851-1902), founder of the Dow Jones & Co. and the Wall Street Journal, and propounder of the Dow theory.
Refrences
http://www.expertrating.com/jobs/Finance-jobs.asp
http://www.businessdictionary.com/definition/net-present-value-NPV.html
http://www.businessdictionary.com/definition/return-on-investment-ROI.html
http://www.investorwords.com/4725/stock.html
http://www.investorwords.com/521/bond.html
http://www.businessdictionary.com/definition/stockholder.html
http://www.businessdictionary.com/definition/shareholder.html
http://www.businessdictionary.com/definition/mutual-fund.html
http://www.businessdictionary.com/definition/stock-market.html
http://www.investorwords.com/4417/SEC.html
http://www.businessdictionary.com/definition/initial-public-offering-IPO.html
http://www.businessdictionary.com/definition/venture-capital.html
http://www.businessdictionary.com/definition/Dow-Jones-Industrial-Average-DJIA.html
http://www.weebly.com/weebly/main.php#
http://www.businessdictionary.com/definition/finance-department.html
http://smallbusiness.chron.com/importance-finance-its-role-within-business-1513.html
http://www.investorwords.com/1940/finance.html
http://yourbusiness.azcentral.com/importance-finance-business-4282.html
http://www.businessdictionary.com/definition/net-present-value-NPV.html
http://www.businessdictionary.com/definition/return-on-investment-ROI.html
http://www.investorwords.com/4725/stock.html
http://www.investorwords.com/521/bond.html
http://www.businessdictionary.com/definition/stockholder.html
http://www.businessdictionary.com/definition/shareholder.html
http://www.businessdictionary.com/definition/mutual-fund.html
http://www.businessdictionary.com/definition/stock-market.html
http://www.investorwords.com/4417/SEC.html
http://www.businessdictionary.com/definition/initial-public-offering-IPO.html
http://www.businessdictionary.com/definition/venture-capital.html
http://www.businessdictionary.com/definition/Dow-Jones-Industrial-Average-DJIA.html
http://www.weebly.com/weebly/main.php#
http://www.businessdictionary.com/definition/finance-department.html
http://smallbusiness.chron.com/importance-finance-its-role-within-business-1513.html
http://www.investorwords.com/1940/finance.html
http://yourbusiness.azcentral.com/importance-finance-business-4282.html