Raising Capital in the Financial Markets

CHAPTER 14 Raising Capital in the Financial Markets CHAPTER ORIENTATION This chapter considers the market environment in which long-term capital is raised. The underlying rationale for the existence of aegis markets is presented, investment banking services and procedures are detailed, private placements are discussed, and credential market regulation is reviewed. CHAPTER OUTLINE I.The mix of corporate securities sold in the capital market. A.When corporations raise cash in the capital market, what fiber of financing vehicle is most favored? The answer to this challenge is corporate bonds. The corporate debt markets clearly dominate the corporate candor markets when impudent (external) funds are being raised. B.From our discussion on the cost of capital, we understand that the U.S. tax system inherently favors debt as a means of raising capital. During the 1999-2001 period, bonds and notes accounted for about 76.9 percent of new corporate securities sold for cash. II.Why financial markets exist A.Financial markets make up of institutions and procedures that facilitate transactions in all types of financial claims. B. nigh economic units spend more than they earn during a granted period of time. Some economic units spend less than they earn.

Accordingly, a mechanism is aimed to facilitate the transfer of savings from those economic units that have a savings surplus to those that have a savings deficit. Financial markets provide such a mechanism. C.The play of financial markets then is to allocate savings in an economic system to the ultimate demander (user) of the savings. D.If there were no financial markets, the wealth of an preservation would be lessened. Savings could not be transferred to economic units, such as business firms, which are most in need of those funds. III.Financing business: The movement of funds through the economy. A.In a normal year the household sector is the largest final supplier of funds to the financial markets. We call... If you want to get a full essay, order it on our website: Ordercustompaper.com

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