BU111 Lecture Notes - Lecture 9: Gain Capital, Contract, Interest Rate
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BU111 Full Course Notes
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Underwriting: taking primary responsibility for making sure stock is bought by others and selling it through distribution network. Primary market: first time the stock trades; includes ipo and underwriting and it is sold directly to the investor from the firm. Secondary market: market where securities that have already been issued are traded (investor to investor, ex. Ipo (initial public offering): first stock of a private company looking to gain capital. Borrowing from investors that purchase the bond. Type of debt for issuing corporation or government. Two conditions when you borrow money: eventually pay it back and interest in the meantime. Specifies fixed rate of return (often paid semi-annually), fixed term (principal repaid at maturity) and priority over stockholders. If a bond has face value and 5% coupon rate, the company will pay a year (two payments per year) Paying less than face value (less than ): priced at a discount.
