Fin - Fin/370 Finance For Business G Francis T Individual...

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Fin/370 Finance For Business G Francis T Individual Paper: Workshop 1 – Discussion Questions “DQ” University of Phoenix – FIN/370 Finance for Business Week 1 100% Workshop 1 – Discussion Questions This paper will explore the discussion questions for the first of five workshops of Finance for Business. The three topics include: 1) The capital market, how the primary market differs from the secondary market, and in the student’s opinion are these markets efficient, and why. 2) The three primary roles of the U.S. Securities and Exchange Commission, how the Sarbanes- Oxley Act of 2002 augments the SEC’s role in managing financial governance, and if the writer thinks the passage of this act had the outcome of businesses becoming more ethical. Examples will be used to support this thinking.3) Ratios which measure a corporation’s liquidity, some problems associated with using these ratios, and how the DuPont analysis would overcome these problems. The DQ’s will be stated, and then the Discussion Answers will be explored below. DQ 1 – The Capital Market What is the capital market? How is the primary market different from the secondary market? In your opinion, are these markets efficient? Why? Discussion Answer 1 The capital market is “Any market in which securities are traded. Capital markets include the stock and bond markets.” (Farlex Financial Dictionary 2009) “Traditionally, this has referred to the market for trading long-term debt instruments (those that mature in more than one year). That is, the market where capital is raised. More recently, capital markets is used in a more general context to refer to the market for stocks, bonds, derivatives and other investments.” (Harvey 2011)
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The primary market differs from the secondary market. Primary Markets are Transactions insecurities offered for the first time to potential investors. This is the only time that the issuing firm receives money for its stock. Secondary Markets are those in which stock previously issued by the firm trades Secondary markets Transactions in currently outstanding securities. Once the newly issued stock is purchased by the public, it begins trading in the secondary market. Previously issued securities will be traded in the secondary market. “Companies and governments use capital markets to raise funds for their operations; for example, a company may issue an IPO while a government may issue a bond in order to conduct new or expand ongoing activities. Investors purchase securities in the capital markets in order to extract a return and earn profit on the securities. Capital markets include primary markets, such as IPOs that are placed with investors through underwriters, and secondary markets, in which all subsequent trading takes place. Government agencies in different countries regulate local capital markets, though some, especially exchanges, play some role in regulating themselves.” (Farlex Financial
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Fin - Fin/370 Finance For Business G Francis T Individual...

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