Financial markets and institutions - the flow of savings to corporations

6 important questions on Financial markets and institutions - the flow of savings to corporations

What is the difference between debt and equity markets

-debt is a contractual agreement with a repayment schedule and maturity date, and the borrower has to pay the money back + intrest


-equity often has periodic payments (dividend), it has no maturity date, including voting right and residual claimant, holders benefit directly from value increase

How does secondary markets work?

these are securities everybody can buy and sell. when you sell these you get the money, this is used as liquidity and to set the price.

What is the job of a broker in the stock market?

his job is to match the seller and the buying for a fee or comission
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What is the job of a dealer in the stock market?

his job is to sell/or buy the shares, he takes the opposite side in the deal.

How do exchanges in trading?

the buyer and seller meet at the same place to exchange commodity or securities, this happens in the NYSE, Deutsche börse,...

How does over the counter work in trading?

deals are made between seller and buyer directly, no exchange
there is no supervision and no central pricing
dealers mutually agree on price and conditions

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