FIN201 Chapter 2 HW

Is an initial public offering an example of a primary or a secondary market transaction?

(Initial Public Offering) Market
The market for stocks of companies that are in the process of going public
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

Indicate whether the following instruments are examples of money market or capital market securities

Money market
The financial markets in which funds are borrowed or loaned for short periods (less than one year)
Capital Market
The financial markets for stocks and for intermediate- or long-term debt (one year or longer)

Money market

The financial markets in which funds are borrowed or loaned for short periods (less than one year)

Capital Market

The financial markets for stocks and for intermediate- or long-term debt (one year or longer)

Money Market VS Capital Market

U.S. Treasury bills- Money Market
Long-term corporate bonds- Capital Market Securities
Common stocks- Capital Market Securities
Preferred stocks- Capital Market Securities
Dealer commercial paper- Money Market
Money market

Dealer Market

Includes all facilities that are needed to conduct security transactions not conducted on the physical location exchanges

Physical location exchanges

Formal organizations having tangible physical locations that conduct auction markets in designated ("listed") securities

Identify and briefly compare the two leading stock exchanges in the United States today.

FIGURE IT OUT

Briefly explain what is meant by the term Efficiency Continuum

there is an efficiency continuum with the market for some companies' stock being highly efficient and the market for other stocks being highly inefficient. The key factor is the size of the company- the larger the firm, the more analysts tend to follow it