Define the following terms and identify their role in finance:

1. Finance
2. Efficient Market
3. Primary Market
4. Secondary Market
5. Risk
6. Security
7. Stock
8. Bond
9. Capital
10. Debt
11. Yield
12. Rate of Return
13. Return on Investment
14. Cash Flow

http://www.investopedia.com/dictionary/#axzz1aKNDen2C

http://financial-dictionary.thefreedictionary.com/

1. Finance: Finance is the management of money and financial resources. It includes activities related to investing, borrowing, lending, saving, budgeting, and managing risks to achieve financial goals.

2. Efficient Market: An efficient market is a market where all available information is quickly and accurately reflected in the prices of securities. In such a market, it is difficult to consistently achieve above-average returns, as prices already reflect all known information and adjust rapidly.

3. Primary Market: The primary market is where newly issued securities, such as stocks and bonds, are sold for the first time directly from the issuer to investors. Companies raise capital in the primary market by selling ownership stakes (stocks) or by issuing debt (bonds).

4. Secondary Market: The secondary market is where previously issued securities are traded among investors, without involvement from the issuing company. It provides liquidity for investors who want to sell their securities and allows new investors to buy those securities. Examples include stock exchanges like the New York Stock Exchange (NYSE) and bond markets.

5. Risk: Risk refers to the uncertainty or potential for loss in an investment or financial decision. It can arise from various factors, such as market fluctuations, economic conditions, political events, or company-specific issues. Investors assess and manage risk to make informed decisions about allocating capital.

6. Security: In finance, a security refers to a financial instrument that represents ownership, debt, or the right to claim future cash flows. Examples include stocks, bonds, options, futures contracts, and mutual funds. Securities help raise capital and allow investors to participate in financial markets.

7. Stock: Stock, also known as a share or equity, represents ownership in a company. When investors buy stocks, they become shareholders and have a claim on the company's assets and earnings. Stocks are typically traded on stock exchanges and offer potential for capital gains and dividends.

8. Bond: A bond is a debt instrument issued by governments, municipalities, or corporations to raise capital. When an investor buys a bond, they are essentially loaning money to the issuer in exchange for periodic interest payments and the return of the principal at maturity. Bonds are typically traded in the bond market.

9. Capital: Capital refers to financial resources, including money or assets, that are available for use in investments or business operations. It can be categorized as debt or equity capital. Debt capital is borrowed money, often with interest, whereas equity capital represents ownership in a company through stocks or other equity investments.

10. Debt: Debt refers to money borrowed by an individual, company, or government from a lender, typically with an obligation to repay the principal amount along with interest over a specific period. Debt can be in the form of loans, bonds, or other forms of credit. It enables individuals and organizations to finance purchases or investments.

11. Yield: Yield indicates the return generated by an investment, usually expressed as a percentage. It represents the income received from an investment relative to its cost or current value. For bonds, yield is often used to calculate the interest payments received compared to the bond's price.

12. Rate of Return: Rate of return measures the gain or loss on an investment relative to its initial cost. It is expressed as a percentage and considers both capital appreciation (increase in value) and income (e.g., dividends, interest). It helps investors evaluate the profitability of an investment over a specific period.

13. Return on Investment (ROI): ROI is a measure used to evaluate the efficiency or profitability of an investment. It compares the gain or loss generated by an investment to its initial cost or investment amount. ROI is expressed as a percentage and helps assess the effectiveness of investment decisions.

14. Cash Flow: Cash flow refers to the movement of money in and out of a business or investment. It tracks the inflows and outflows of cash, including revenues, expenses, investments, and financing activities. Positive cash flow indicates more money coming in than going out, while negative cash flow indicates the opposite. Cash flow is an important indicator of financial health.