BFB1001 Lecture Notes - Lecture 8: Liquidity Risk, Current Liability, Bond Market
2 Aug 2018
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Document Summary
When nancing through debt securities, corporates and governments are in effect borrowing money. This is done by issuing (creating) then selling debt securities. Upon sale, the issuer receives capital from the buyer and agrees to pay the buyer or subsequent holder a return over the life of the security. At the end of the life of the security, the issuer returns the capital to the holder of the security. Debt securities are liabilities to the issuer, and are assets to the investors who buy them. The debt securities market can be split into a : short-term market: called the money market (mm, long-term market: called the bond market/fixed-interest market. Both markets are wholesale markets; where the buyers and sellers are nancial institutions, non- Nancial institutions and governments that trade in millions and billions of debt securities. Discount securities and have a short maturity. Bonds and have maturity > 1 year.
