金融英语课件李丽 马跃ISBN 9787810788175 PPTchapter_9.pptVIP

Chapter 9 The Capital Market Chapter 9 The Capital Market The capital market is the market in which long-term debt (generally those with original maturity of one year or greater) and equity instruments are traded. Firms that issue capital market securities and the investors who buy them have very different motivations than they have when they operate in the money markets. Firms and individuals use the money markets primarily to warehouse funds for short periods of time until a more important need or a more productive use for the funds arises. By contrast, firms and individuals use the capital markets for long-term investments. The capital markets provide an alternative to investment in assets such as real estate or gold. 1. Capital Market Trading Capital market trading occurs in either the primary market or the secondary market. The primary market is where new issues of stocks and bonds are introduced. Investment funds, corporations, and individual investors can all purchase securities offered in the primary market. When firms sell securities for the first time, the issue is an initial public offering (IPO). Subsequent sales of a firm’s new stocks or bonds to the public are simply primary market transactions. The capital markets have well-developed secondary markets. A secondary market is where the sale of previously issued securities takes place. There are two types of exchanges in the secondary market for capital securities: organized exchanges and over-the-counter (OTC) exchanges. Whereas most money market transactions originate over the phone, most capital market transactions occur in organized exchanges. 1) Organized Securities Exchanges 2) Over-the-Counter Markets Securities that are not listed on one of the exchanges trade in the over-the-counter market. This market is not organized in the sense of having a building where trading takes place. Rather, it is a linkage of many dealers and brokers who communicate with e