State And Local Governments In The Financial Markets演示教学.ppt

The Secondary Market for Corporate Bonds The secondary market for corporate bonds is relatively limited compared to the markets for other long-term securities like common stock and municipal bonds. The number of active individual investors is small and institutional investors tend to follow a buy and hold strategy. Recently however, many institutions are looking at total performance and have become more aggressive. ? 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw Hill / Irwin 20 - * Money and Capital Markets 20 C h a p t e r Eighth Edition Financial Institutions and Instruments in a Global Marketplace Peter S. Rose McGraw Hill / Irwin Slides by Yee-Tien (Ted) Fu State And Local GovernmentsIn The Financial Markets ? Learning Objectives ? To understand why state and local government borrowing has grown so rapidly in recent years. To explore the various ways in which state and local governments raise the funds they need. To examine the marketing process through which state and local government bonds and notes reach investors, and to learn why these instruments are attractive to investors. Introduction The borrowing and spending activities of state and local governments have been one of the most rapidly growing segments of the financial system in recent years. State and local governments are pressured by rising populations and inflated costs, while many investors are attracted by the high quality, ready marketability, active secondary market, and tax exemption feature of state and local debt obligations. Growth of State and Local Government Borrowing $ Billions U.S. Municipal securities Data Source: Board of Governors of the Federal Reserve System Growth of State and Local Government Borrowing What factors account for the strong growth in municipal borrowing? Rapid population growth Uneven distribution of population growth across the U.S. – smaller outlying communities were transformed into cities Upgrading of citizens’ expectations concerning the