JAHARA CALAYCA

ACCBP100

Direct financing is when you borrow money from a friend, or when you purchase
stocks or bonds directly from the corporate issuing them. These direct financial
arrangements take place through financial markets, markets in which lenders (investors)
lend their savings directly to borrowers. Private placements, Brokers and dealers, and
investment brokers.

An alternative is the capital raising event known as a private placement. A private

placement involves the sale of securities to a relatively small number of select investors.
Investors targeted include wealthy accredited investors, large banks, mutual funds,
insurance companies and pension funds. A private placement is the sale of
a security to a small number of investors. Issuing entities are interested in private
placements because these transactions avoid the time-consuming process of having
securities registered for sale to the general public through the Securities and
Exchange Commission. Examples of the types of securities that may be sold through
a private placement are common stock, preferred stock, and promissory notes. An
investor may be offered an inducement to participate in a private placement. For
example, this could involve a price that is discounted from the market price, or
perhaps the addition of warrants to the securities.

A broker-dealer performs two roles. It is both a broker, when it trades for a client
and charges a commission, and a dealer, when it trades for itself. A broker-dealer is a
person or firm in the business of buying and selling securities for its own account or on
behalf of its customers. Broker is an individual or firm that charges a fee or commission for
executing buy and sell orders submitted by an investor. For example, if you are interested
in selling your shares of Company XYZ, which hardly ever have any buyers,
a broker would effect the transaction for you if it had a readily available buyer. But a
broker-dealer would effect the transaction even if it had to buy your shares and hold them
in its own portfolio for a while -- especially if the broker-dealer were a market maker in
Company XYZ stock and was responsible for making sure Company XYZ stock was
"tradeable."

An investment banker is an individual who often works as part of a financial

institution and is primarily concerned with raising capital for corporations, governments,
or other entities. For example a company has a new investments and the one that will
provides financial advice are the investment brokers.