Chapter 18

Chapter 18 - CONTEMPORARY BUSINESS Chapter Outline CHAPTER...

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Unformatted text preview: CONTEMPORARY BUSINESS Chapter Outline CHAPTER 18: FINANCING AND INVESTING THROUGH SECURITIES MARKETS Opening Chapter Page Chapter 18 examines how securities are bought and sold in two markets—the primary market (the initial sale of new securities to investors) and the secondary market (the sale of existing securities between investors). The characteristics of stocks, bonds, and money market instruments (short-term debt securities), and how investors choose specific securities, are outlined. It then gets into the intense and cutting-edge world of securities exchanges and the securities transaction reports they generate, used by millions worldwide in making business and investment decisions. The text then highlights mutual funds, an increasingly popular option for investors. The chapter concludes with a review of the laws that regulate the securities markets and protect investors. Learning Goal 1: Distinguish between the primary market for securities and the secondary market. Key Terms securities / primary market / initial public offering (IPO) / tombstones / open auctions / competitive bid / noncompetitive bid / investment bankers / underwriting / secondary market Class Notes / Lecture Outline Chapter Opening Opening vignette – “Cable Companies Leave Public Life.” Think about your local cable company. Is it private or public? What are the pros and cons of each? Can you imagine other industries in which firms may decide to go public, 185 then later pull back and return to private life? Basic PowerPoint 1 Expanded PowerPoint 1 1. Securities and the primary market a. Stocks and bonds are called securities , as both represent obligations of issuers to provide purchasers with expected or stated returns on the funds invested or loaned b. Securities are sold in two financial markets—the primary market and the secondary market c. The primary market involves the initial sale of new securities to investors d. The secondary market consists of the sale of existing securities between investors e. A security is a stock, bond, or money market instrument that represents an obligation on the part of the issuer 2. Primary versus secondary markets Basic PowerPoint 2 Expanded PowerPoint 2 a. In the primary market , firms or government agencies issue securities and sell them to the public i. When a firm needs money to expand, build a plant, or buy inventory, it may sell a bond or stock to the investing public ii. A stock offering gives investors the opportunity to purchase ownership shares in a firm iii. When a company offers stock for sale to the public...
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This note was uploaded on 11/26/2011 for the course BUSN 1140 taught by Professor Skogstrom during the Fall '10 term at MCTC.

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Chapter 18 - CONTEMPORARY BUSINESS Chapter Outline CHAPTER...

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