文档介绍：Introduction to Business Law
How are capital markets different from the money markets?
The money markets are used for raising short term finance, whereas the capital markets are used for the raising of long term finance
Money markets are usually used for general operating expenses, such as covering brief periods of illiquidity, while capital markets are often used to acquire capital to invest in additional physical capital goods, which will help increase the firm’s e
How are capital markets different from bank lending?
With a regular bank loan, the lending is not securitized (., it doesn’t take the form of resalable security like a share or bond that can be traded on the markets)
Lending from banks and similar institutions is subject to different regulations from capital market lending
Capital market investors probably often have a higher appetite for risk than banks
How do firms sell securities on to the market?
Companies sell new stock or bonds in public offerings to investors via a mechanism known as underwriting
Who are underwriters?
Usually investment banks, who raise investment capital from investors on behalf of corporations and governments that are issuing securities
How do underwriters make money?
They make their e from the price difference (the “underwriting spread”) between the price they pay the issuer and what they collect from investors or from broker-dealers who buy portions of the offering
How do investors sell securities on to the market after they’ve purchased securities in public offerings?
Investors sell on the secondary markets (such as NYSE and NASDAQ)
On the primary market, each security can be sold only once, but on secondary markets, there is no limit on the number of times a security can be traded
Why do secondary markets generally help the issuer firms?
Transactions on the secondary markets don’t directly help raise finance for firms, but they do make it easier panies to raise finance on the primary market, as investo