An Overview of Financial Markets

An Overview of Financial Markets - An Overview of Financial...

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Tuesday September 13, 2011 An Overview of Financial Markets 1
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Flow of Funds through the Financial System 2
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Structure of Financial Markets 3
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Debt Markets Debt markets: e.g. bond Contractual agreement by the borrower to pay the holder of the instrument fixed dollar amounts at regular intervals (interest + principal) until a specified time (maturity date) Maturity: Time until expiry Short term: Less than one year Intermediate Term: Greater than one year and less than 10 years Long term: Greater than 10 years 4
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Equity markets Equity markets e.g. common stock Claims to a share in net income (income after expenses and taxes) Dividends Long term Residual claimants Equity holders benefit directly from increases in the corporations profitability of asset value Differences between debt and equity 5
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Primary and Secondary Markets Primary Market; Financial market in which new issues of stocks are bonds are sold. Secondary Market: securities that have been previously issued are resold Primary markets: Underwriting Investment bank Brokers ; executes the trade on behalf of others Dealers trades business on their own behalf. 6
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IPO Process I 7 Firm hires an investment bank. Underwriters act as middlemen between companies
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This document was uploaded on 12/04/2011.

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An Overview of Financial Markets - An Overview of Financial...

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