Raise money from investors to provide initial

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Raise money from investors to provide initial financing for private start-up companies. Leveraged buyout firms Acquire established companies that have not been performing very well with objective of of making them profitable again and then selling them. Financial services corporations GE Capital Although they lend or finance business, they are NOT commercial banks 2.3 Securities Markets Security is a negotiable instrument that represents a financial claim. Can take form of ownership (stocks) or debt agreement (bond). Primary market New securities are bought and sold for the first time Firms selling securities actually receive the money raised Secondary market Trading of previously issued securities take place Issuing firm does not receive any new financing. Principal benefit = liquidity How securities markets bring corporations and investors together Securities markets are unique in that investors in the securities markets provide money directly to the firms that need it. Types of Securities Debt securities If debt must be paid repaid in less than a year, they are sold in the money market. If debt has a maturity between 1 - 10 years, it’s a note Longer than 10 is a bond. Equity securities - ownership of the corporation Two types of equity securities Common stock Represents equity ownership in a corporation Residual owners of the firm Receive portion of profit in the form of dividends
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Can choose not to pay dividends Preferred stock Receive dividends before any common stockholders. No voting rights Stock Markets Classified as either organized security exchanges or over-the counter market. Today, not much difference between those two NYSE is a mix of both.
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