ch2.pdf - 1 Physical Asset Markets Products such as wheat...

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1. Physical Asset Markets Products such as wheat, autos, real estate, computers, and machinery. Also known as "Tangible" or "Real" asset markets 2. Financial Asset Markets - Deal with stocks,bonds,notes, and mortgages. - This market deal with derivative securities whose value are derived from changes in the prices of other assets. 3. Spot Markets Markets in which assets are brought or sold for "on-the-spot" delivery. 4. Futures Markets Markets in which participants agree today to buy or sell an asset at some future date. - for example, a farmer may enter into a futures contract in which he agrees today to sell 5,000 bushels of soybeans 6 months from now at a price of $9.30 a bushel. 5. Money Markets Markets for short-term, highly liquid debt securities. - the New York, London, and Tokyo money markets are among the world's largest. 6. Capital Markets Markets for intermediate - or long-term debt and corporate stocks. - the New York stock exchange, where the stocks of the largest U.S. corporations are traded, is a prime example of a capital Market. 7. Short-term Less than 1 year 8. Intermediate- term 1 to 10 years 9. Long-term more than 10 years 10. Primary Markets Markets in which corporations raise new capital. 11. Secondary Markets Markets in which existing, already outstanding securities are traded among investors. 12. Private Markets Markets in which transactions are worked out directly between two parties. - Bank loans and private debt placements with insurance companies are private, they may be structured in any manner to which the two parties agree. 13. Public Markets Markets in which standardized contracts are traded on organized exchanges. - Securities that are traded in public markets (for example, common stock and corporate bonds) are held by a large number of individuals. 14. Investment Banks Traditionally Help companies Raise capital They (A) help corporations design securities with features that are currently attractive to investors,(B) buy these securities from the corporation, and(C) resell them to savers.
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