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CB12e Basic PPT Ch18

CB12e Basic PPT Ch18

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Published by: tqt10 on Jan 13, 2009
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09/21/2010

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Chapter 18
Financing and Investing Through SecuritiesMarkets
 L e a r n i n g  G o a l s
Distinguish between the primaryand secondary securities markets.Compare money marketinstruments, bonds, and commonstock, including their benefits.Identify the objectives of investorsand the types of securities thatbest correspond to each.Describe the characteristics of themajor stock exchanges.Explain the process of buying or selling a security and theinformation included in stock andbond quotations and stockindexes.Discuss the role of mutual fundsand exchange-traded funds in thesecurities market.Evaluate the major features of regulationsand laws designed toprotect investors.
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Securities
Financial instrument such as stocks and bonds.
PRIMARY VERSUS SECONDARY MARKETS 
Primary market
Market in which new security issues are first sold to investors;issuers receive the proceeds from the sale.
Initial public offering (IPO)
The first sale of a company’s stock to the generalpublic.
Investment bankers
Financial specialists who handle the sales of mostcorporate and municipal securities.
 
Underwriting
Process of purchasing an issue from a firm or government andthen reselling the issue to investors.
Secondary market
Market in which existing security issues arebought and sold by investors.
 
 
 
TYPES OF SECURITIES 
Money Market Instruments
Money market instruments
Short-term debt securities issuedby corporations, financial institutions, and governments.
 
Generally low-risk securities and are purchased by investorswhen they have surplus cash.
Bonds
 
Through bonds firms obtain long-term debt capital.
 
Claims of bondholders are satisfied before those of stockholders in cases of bankruptcy.

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