Business Finance w PANKIE CH.2
publicly owned corporations
A corporation that is owned by a relatively large number of individuals who are not actively involved in the firm's management.
financial service corporations
A firm that offers a wide range of financial services, including investment banking, brokerage operations, insurance, and commercial banking.
over-the-counter (OTC) market
A large collection of brokers and dealers, connected electronically by telephones and computers, that provides for trading in unlisted securities.
2-3: Is an initial public offering an example of primary or a secondary market transaction? explain
A primary market is the market in which corporations raise capital by issuing new securities. An initial public offering is a stock issue in which privately held firms go public. Therefore, an IPO would be an example of a primary market transaction.
physical location changes
Formal organizations having tangible physical locations that conduct auction markets in designated ("listed") securities.
money market funds
Mutual funds that invest in short-term, low-risk securities and allow investors to write checks against their accounts
going public
The act of selling stock to the public at large by a closely held corporation or its principal stockholders.
capital markets
The financial markets for stocks and for intermediate- or long-term debt (one year or longer).
money markets
The financial markets in which funds are borrowed or loaned for short periods (less than one year)
spot markets
The markets in which assets are bought or sold for "on-the-spot" delivery.
2-4: Indicate whether the following instruments are examples of money market or capital market securities a. US Treasury Bills b. Long term corporate bonds c. Common stocks d. Preferred stocks e. Dealer commercial paper
a . A U.S. Treasury bill is an example of a money market transaction. b . Long-term corporate bonds are examples of capital market transactions. c . Common stocks are examples of capital market transactions. d . Preferred stocks are examples of capital market transactions. e . Dealer commercial paper is an example of a money market transaction.
closely held corporation
a corporation that is owned by a few individuals who are typically associated with the firm's management
investment banks
an organization that underwrites and distributes new investment securities and helps businesses obtain financing
derivative
any financial asset whose value is derived from the value of some other "underlying" asset
dealer market
includes all facilities that are needed to conduct security transactions not conducted on the physical location exchanges
primary markets
markets in which corporations raise capital by issuing new securities
secondary markets
markets in which securities and other financial assets are traded among investors after they have been issued by corporations
public markets
markets in which standardized contracts are traded on organized exchanges
private markets
markets in which transactions are worked out directly between two parties
mutual funds
organizations that pool investor funds to purchase financial instruments and thus reduce risks through diversification
Initial Public Offering (IPO) Market
the market for stocks of companies that are in the process of going public
future markets
the markets in which participants agree today to buy or sell an asset at some future date
commercial banks
the traditional department store of finance serving a variety of savers and borrowers
