1. What do investment banks do in the financial markets?

-Investment banks operate for a number of reasons in the fields of finance

and investments including new stock problems, the management of mergers and
acquisitions and their role as a financial advisor. Emission of stocks and bonds is
an important means of raising money for an enterprise. However, it takes special
skills to carry out these trades, from price-making financial instruments to
maximum income and regulatory obligation traffic. Typically this is where an
investment bank takes shape.

2. Describe the difference between the primary market and secondary market.
-Primary Market- If a corporation issues new stocks and shares publicly
for the first time, this is done on the capital market main. This industry is also
known as the emerging market for problems. The latest issue is also presented
as an initial public offering (IPO). When buyers buy shares in the main stock
market, the securities offering corporation employs a company to analyze the
securities and produce a prospective that sets out the price and other securities
to be sold.
-Secondary Market- is where shares are exchanged on the primary market
after the firm has sold its bid. That is also known as the capital exchange. The
quantities of exchanged securities vary day to day, as defense supply and
demand fluctuates. This also has a major impact on the price of defense. The
original bid is complete and thus, once the corporate stock purchase takes place,
the issuing firm is no more a party to any deal by all buyers.

3. What is the difference between a debt security and an equity security?

-Debt Security- a securities that are sold in short-term debt market, Bonds
such as corporate bonds or government bonds are one of the most popular types
of debt securities. Debt instruments are more closely linked to a lending
arrangement between the issuer and the seller than to a conventional interest in
equity.
-Equity Security legal cases are also synonymous with more complex
forms of disputes and problems. This is mostly due to the close relationship
between the holder and the corporation or enterprise.

4. What makes preferred stock “preferred”?

- Which means, before any dividends are distributed by preferential
shareholders to common shareholders, who are divided on everything
remaining? Preferred shares have preference in the distributions, usually greater
than ordinary stocks which are payable on a monthly or quarterly basis.

5. Describe how securities and markets bring corporations and investors together.
-the securities markets are just another component of the financial
marketplace. They are unique, however, in that investors in the securities
markets provide money directly to the firms that need it, as opposed to
making deposits in commercial banks that then loan money to those firms.
Step 1. The firm sells securities to investors. The firm raises money in the
securities markets by selling either debt or equity. When it initially sells the
securities to the public, the sale is considered to take place in the primary
market. This is the only time the firm receives money in return for its
securities.
Step 2. The firm invests the funds it raises in its business. The firm invests
the cash raised in the securities markets in hopes that it will generate cash
flows- for example; it may invest in a new restaurant, a new hotel, a
factory expansion, or a new product line.
Step 3. The firm distributes the cash earned from its investments. The
cash flow from the firm’s investments is reinvested in the firm, paid to the
government in taxes, or distributed to the investors who own the securities
issued in step 1. In the last case, the cash is invested to the invested who
loaned the firm money (that is, bought the firms debt securities) through
the payment of interest and principal. Cash is distributed to the investors
who bought equity (stock) through the payment of cash dividends or the
repurchase of shares of the firms previously issued stock.
Step 4. The firm’s securities are traded in the secondary market.
Immediately after the firms securities are sold to the public, the investors
who purchased them are free to resell them to other investors. These
subsequent transactions take place in the secondary market.