Financial Markets and the Investments
20 important questions on Financial Markets and the Investments
What are capital markets?
What are the key components of the US financial market system and the financing of business?
- direct tranfer of funds
- indirect transfer using an investment-banking firm
- indirect transfer using the financial intermediary
What is an angel investor?
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What is a venture capitalist?
What is a public offering?
What is a private placement?
What is a primary market?
What is initial public offering (IPO)?
What is a seasoned equity offering (SEO)?
What is a money market?
What is a spot market?
What are future markets?
What are organized security exchanges?
What is over-the-counter markets?
the money market is an over-the-counter market, just like most coporate bonds
What are the benefits of derived from having a stock exchange?
- providing a continuous market
- establishing and publicizing fair security prices
- helping business raise new capital
What is an investment banker?
a financial specialist who:
- underwrites new securities
- distributes new securities
- advises corporate clients about raising new funds
What is an underwriter's spread?
Which 6 types of distribution methods exsists today?
- a negotiation purchase (terms agreed)
- a competitive bid purchase (highest offer)
- a commission of best-efforts basis (fixed comissions)
- a priviliged subscription (select few)
- a dutch auction (cheapest offer)
- a direct sale (no bids)
What are the advantages associated with private debt placements?
- speed
- reduced costs
- financially flexible
What are the disadvantages associated with private debt placements?
- interest costs
- restrictive covenants
- the possibility of future SEC registration
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