An Assignment

On
Financial Terms

Prepared for
Nusrat Farzana
Assistant Professor
School of Business & Economics
United International University

Prepared by
Kazi Sidratul Muntaha
ID: 111-151-561
FIN-2319 (E)

November 10, 2016

United International
University

1. Stakeholders: Stakeholders can affect or be affected by the organization's

actions, objectives and policies. Some examples of key stakeholders are
creditors, directors, employees, government (and its agencies), owners
(shareholders), suppliers, unions, and the community from which the
business draws its resources.
2. Stockholders: One who owns shares of stock in a corporation or mutual
fund. For corporations, along with the ownership comes a right to declared
dividends and the right to vote on certain company matters, including the
board of directors. also called shareholder.
3. Annuity: An annuity is a contractual financial product sold by financial
institutions that is designed to accept and grow funds from an individual and
then, upon annuitization, pay out a stream of payments to the individual at a
later point in time.
4. Bond: A bond is a debt investment in which an investor loans money to an
entity (typically corporate or governmental) which borrows the funds for a
defined period of time at a variable or fixed interest rate.
5. Net Working Capital: Net working capital is the aggregate amount of all
current assets and current liabilities. It is used to measure the short-term
liquidity of a business, and can also be used to obtain a general impression of
the ability of company management to utilize assets in an efficient manner.
6. Common Stock: Common stockholders are on the bottom of the priority
ladder for ownership structure; in the event of liquidation, common
shareholders have rights to a company's assets only after bondholders,
preferred shareholders and other debtholders are paid in full.
7. Cost of Capital: Cost of capital refers to the opportunity cost of making a
specific investment. It is the rate of return that could have been earned by
putting the same money into a different investment with equal risk. Thus, the
cost of capital is the rate of return required to persuade the investor to make
a given investment.
8. Debenture: A debenture is a type of debt instrument that is not secured by
physical assets or collateral. Debentures are backed only by the general
creditworthiness and reputation of the issuer. Both corporations and
governments frequently issue this type of bond to secure capital.
9. Diversifiable Risk: Diversifiable risk is simply risk that is specific to a
particular security or sector so its impact on a diversified portfolio is limited.

An example of a diversifiable risk is the risk that a particular company will

lose market share.
10.Earnings Per Share (EPS): Earnings per share (EPS) is the portion of a
company's profit allocated to each outstanding share of common stock.
Earnings per share serves as an indicator of a company's profitability.
11.Equity: A stock or any other security representing an ownership interest.
This may be in a private company (not publicly traded), in which case it is
called private equity.
12.Future Value: Future value is the value of an asset at a specific date. It
measures the nominal future sum of money that a given sum of money is
"worth" at a specified time in the future assuming a certain interest rate, or
more generally, rate of return; it is the present value multiplied by the
accumulation function.
13.Inflation: In economics, inflation is a sustained increase in the general price
level of goods and services in an economy over a period of time. When the
price level rises, each unit of currency buys fewer goods and services.
14.Insolvency: Insolvency is the state of being unable to pay the money owed,
by a person or company, on time; those in a state of insolvency are said to be
insolvent. There are two forms: cash-flow insolvency and balance-sheet
insolvency.
15.Initial Investment: Initial investment is the amount required to start a
business or a project. It is also called initial investment outlay or simply initial
outlay. Capital budgeting decisions involve careful estimation of the initial
investment outlay and future cash flows of a project.
16.Investment Bank: An investment bank is typically a private company that
provides

various

corporations,

and

financial-related
governments

and

such

other
as

services

raising

to

financial

individuals,
capital

by

underwriting or acting as the client's agent in the issuance of securities.

17.Leasing: A lease is a contract outlining the terms under which one party
agrees to rent property owned by another party. It guarantees the lessee, the
tenant, use of an asset and guarantees the lessor, the property owner or
landlord, regular payments from the lessee for a specified number of months
or years.
18.Liquidity: Liquidity is the term used to describe how easy it is to convert
assets to cash. The most liquid asset, and what everything else is compared
to, is cash.

19.Mortgage: A mortgage is a debt instrument, secured by the collateral of

specified real estate property, that the borrower is obliged to pay back with a
predetermined set of payments. Mortgages are used by individuals and
businesses to make large real estate purchases without paying the entire
value of the purchase up front. Over a period of many years, the borrower
repays the loan, plus interest, until he/she eventually owns the property free
and clear. Mortgages are also known as "liens against property" or "claims on
property." If the borrower stops paying the mortgage, the bank can foreclose.
20.Net Cash Flow: Net cash flow refers to the difference between a company's
cash inflows and outflows in a given period. In the strictest sense, net cash
flow refers to the change in a company's cash balance as detailed on its cash
flow statement.
21.Non Diversifiable Risk: Risk of an investment asset (bond, real estate,
share/stock, etc.) that cannot be reduced or eliminated by adding that asset
to a diversified investment portfolio. Market or systemic risks are nondiversifiable risks.
22.Portfolio: A portfolio is a grouping of financial assets such as stocks, bonds
and cash equivalents, as well as their funds counterparts, including mutual,
exchange-traded and closed funds. Portfolios are held directly by investors
and/or managed by financial professionals. Prudence suggests that investors
should construct an investment portfolio in accordance with risk tolerance
and investing objectives.
23.Prospectus: a printed document that advertises or describes a school,
commercial enterprise, forthcoming book, etc., in order to attract or inform
clients, members, buyers, or investors.
24.Sunk Cost: In economics and business decision-making, a sunk cost is a cost
that has already been incurred and cannot be recovered. Sunk costs (also
known as retrospective costs) are sometimes contrasted with prospective
costs, which are future costs that may be incurred or changed if an action is
taken.
25.
Default: Default is the failure to pay interest or principal on a loan or
security when due. Default occurs when a debtor is unable to meet the legal
obligation of debt repayment, and it also refers to cases in which one party
fails to perform on a futures contract as required by an exchange.
26.Net Worth: Net worth is the amount by which assets exceed liabilities. Net
worth is a concept applicable to individuals and businesses as a key measure

of how much an entity is worth. ... In the business context, net worth is also
known as book value or shareholders' equity.
27.Amortization: Amortization is the paying off of debt with a fixed repayment
schedule in regular installments over a period of time for example with a
mortgage or a car loan.
28.Bad Debt: Bad debt is debt that is not collectible and therefore worthless to
the creditor. ... Can Businesses Write Off Bad Debts. ... Bad debt expense
represents the amount of uncollectible accounts receivable that occurs in a
given period.
29.Initial Public Offerings (IPO): An initial public offering (IPO) is the first time
that the stock of a private company is offered to the public. IPOs are often
issued by smaller, younger companies seeking capital to expand, but they
can also be done by large privately owned companies looking to become
publicly traded.
30.Creditworthiness: Creditworthiness is a valuation performed by lenders
that determines the possibility a borrower may default on his debt
obligations. It considers factors, such as repayment history and credit score.