money and cap 15.docx - Dominique Nicholson Money and...

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Dominique NicholsonMoney and Capital MarketsDr. LabadieChapter 15The objectives of this chapter are to describe the different methods of regulating primary,secondary, and intermediated financial markets, understand the United Stated dual bankingsystem and the array of regulators who oversee it, explain universal banking and its possiblebenefits and risks.Financial system is one of most intensely regulated sectors in US economy.-Promote competition– Protect individual consumers– Assure stability of financial system– Facilitate monetary policy.Regulation of Financial Markets in the United States:Desire to protect individualinvestor. Best protection is adequate information about securities. Full disclosure broadensinvestor’s participation in financial markets.Regulation of the Primary MarketSecurities Act of 1933:Requires disclosure of information for newly issued publiclytraded securities. Privately held firms are not required to reveal financial information to thepublic at large, only to the lenders.Securities Exchange Act of 1934: Created the Securities and Exchange Commission(SEC) to administer provisions of 1933 Act. Publicly traded security must file registrationstatement and preliminary prospectus disclosing information about issue. The prospectus does
not state the interest rate on a bond issue or price for equity issues—determined in the marketwhen sold. If information is adequate, SEC approves the statement and sale. Approval by theSEC does not imply that it views the new issue as an attractive investment—merely meansdisclosure of information is adequate. Extended 1933 Act to include periodic disclosure of

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Term
Spring
Professor
CherylJohnson
Tags
Business, Financial Markets, Federal Reserve, Great Depression, U S Securities and Exchange Commission, Federal Deposit Insurance Corporation, state banks

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