25556 Chapter Notes - Chapter 3: Merchant Bank, Investment Banking, Root Mean Square
Document Summary
Direct financing - arranged through issuing securities to investors in the nancial markets in order to raise funds for de cit units. De cit units - engage rms that assist them arrange the issue of securities, ie the major banks and investment banks. Surplus units - mostly supply funds to fund managers who invest the pooled funds in return for fees, although retail investors invest on their own behalf. Mismatches encountered in nancing - whether the ow-of-funds is arranged directly or indirectly, difference generally exist between the preferences of surplus and de cit units: Adi and the rate neared by the adi"s depositors and other lenders. Direct nancing involves the arrangements for the issuing of securities (primary market), and the subsequent trading of issued securities in the secondary market. The issuing of securities is subject to asic regulations when they are issued to retail investors: Issuers are required to provide relevant and reliable information to overcome information asymmetry.
