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Celly-week2-FIN370-Indy - 14-4(a)continuous market –...

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Celeste Bourne University of Phoenix FIN370 Chapter Study Questions 14-1 Financial markets report price for each good; they are institutions and procedures that facilitate transactions in all types of financial claims (securities). They exist in order to allocate the supply of savings from those economic units with a surplus to those with a deficit. The economy would suffer without a developed financial market system because the wealth of the economy would be less without them. Rate of capital formation would not be as high, followed by the slowed rate of stock contribution to (1) dwellings, (2) productive plant and equipment, (3) inventory, and (4) consumer durables. Normal business activities would be funded slowly or not at all. 14-3. MM facilitates transactions using short-term financial instruments; whereas, CM facilitates transactions using long-term financial instruments.
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Unformatted text preview: 14-4 (a)continuous market – price volatility reduced (b)establishing & publicizing fair security prices – objective auction-type determination of price (c)helping business raise new capital – new firms have a place to publicize security offerings whose price will be subjected to a competitive determinant rather than having to assign prices 14-7 The i-banker is a financial spet involved as a financial intermediary in the merchandising of securities. He or she underwrites, distributes, and advises. (a)underwriting : assuming a risk; i-banks will buy in primary markets and sell in secondary markets (b)distributing : selling function (c)advising : offers guidance about the wholesale purchase/selling of stocks of MMI & CPI 15-12A is in Spreadsheet 15-13A is in Spreadsheet...
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