week2 - FIN/370 Finacial Market Report Colin Callaway...

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FIN/370 Finacial Market Report 1 Colin Callaway FIN/370 03/28/16 Cheryl Heath
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FIN/370 Finacial Market Report 2 When seeking to understand finance for business purposes it is essential to understand the nature and role of financial markets. Financial markets and the financial institutions that administer these markets have become extremely important to most of the developed world’s economies. Financial markets create an environment whereby companies, or governments that wish to borrow money can be connected with investors who wish to loan money to that company or government. Without these markets companies or governments may not have any alternative way to collect funding for their activities. Thus, the importance of the role of financial markets cannot be overstated. Financial markets can be broken down between primary verses secondary, as well as money markets versus capital markets. Primary markets are characterized by the company or government creating financial instruments such as bonds or stocks to be sold to investors. When companies or governments need more money in order to complete a project, they will issue additional stocks or bonds to be sold to investors. If it is the first time a company has issued stock for public offering, it is called an IPO. Financial institutions distribute these stocks and bonds to investors. In the United States,
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