BU283 Study Guide - Midterm Guide: Efficient-Market Hypothesis, Sole Proprietorship, Taxation In Canada
Document Summary
The financial system: financial markets, places in which suppliers of capital and users interact. Capital markets: for securities with maturities greater than 1 year, primarily stocks and bonds. Issued by companies and governments to fund projects and investment activities: bonds: represent a debt or obligation to pay, stocks: represent ownership interest in a company and a residual claim to assets. Primary markets: when securities are offered for the first time (ipo, the only time an issuer receives the funds. Intermediated by investment banks who buy securities from the issuers: profit from the spread between what the issuer sells the securities for and what the bank sells them for, also profit from advisory fees. Secondary markets: when securities are traded after their ipo. Issuers do not receive any funds from secondary market activity: stock exchanges are secondary markets, secondary markets can take 2 forms, auction markets: one physical location, one price determined by the supply and demand, ex.
