CH03 - 3-1Chapter 3Financial Intermediaries3-2Deficit...

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Unformatted text preview: 3-1Chapter 3Financial Intermediaries3-2Deficit SectorsFinancial IntermediariesClaimsSurplus Sectors$ClaimsClaims$$3-3Pooling of small savings.Diversification of risks.Economies of scale in monitoring information and evaluating risks.Lower transactions costs.Special reasons.The above are not mutually exclusive.Advantages of Financial Intermediaries3-4The primary market for securities involves the initial sale.The secondary market for securities involves the resale.Primary Market vs. Secondary Market3-5Investment banking is the marketing of securities when they are initially sold.Some securities are sold to private buyers. Others are sold to the public. The exact difference is a technical legal issue.Public offerings must be registered with the Securities and Exchange Commission (SEC).Investment Banking3-6Investment banking firms sell public offerings. They are essentially marketers of securities and charge a fee for their services. This is often called an underwriting fee....
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This note was uploaded on 06/07/2011 for the course FIN 4243 taught by Professor Dudley during the Spring '08 term at University of Florida.

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CH03 - 3-1Chapter 3Financial Intermediaries3-2Deficit...

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