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Unformatted text preview: ee Chapter 2). Nevertheless, the direct financial markets are evolving even faster; due to technological advances, the costs of direct access
to financial markets by savers are ever falling and the relative benefits to the individual savers of investing through FIs are narrowing. The Technology in the News box in
this chapter gives an example of this ability to reduce transaction costs with an etrade
on the Internet rather than using a traditional stockbroker and paying brokerage fees.
In addition, a number of companies allow investors to buy their stock directly without
using a broker. Among well-known companies that have instituted such stock purchase
plans are Bell Atlantic, Bell/South, IBM, and Walt Disney. A final example is the private placement market, where securities are directly sold by corporations to investors
without underwriters and with a minimum of public disclosure about the issuing firm.
Privately placed bonds and equity have traditionally been the most illiquid of securities, with only the very largest FIs or institutional investors being able or willing to
hold them in the absence of a secondary market. In April 1990, the Securities and Exchange Commission amended Regulation 144A....
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This document was uploaded on 03/09/2014 for the course ACC 301 at HELP University.
- Spring '09