BU111 Lecture Notes - Lecture 12: Private Equity, Trust Company
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BU111 Full Course Notes
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The roles of the 4 pillars for business financing (cid:894)(cid:862)e(cid:863) in pe t(cid:895) Pillars 1 & 2: banks and alternate banks. Trust companies, credit unions, world banks, etc. Companies will go to banks to make deposits and borrow. Can get loans from the bank (usually small and medium companies will go to banks/pillar 1 and 2 to get money) Insurance companies, pension funds, venture capitalists making private deals to invest. Large/multimillion businesses that are established will go here for loans in the form of creating bonds. After all other creditors are paid (i. e. along with other after bondholders); preferred ahead of creditors, and common before stockholders. Lowest instruments of same company are dividends) - bonds are the least volatile (getting regular coupon payments, only affected by interest rates) - Common stocks are more risky (affected by interest rates, what other companies are doing, internal decisions of company and external factors of diamond e, new entrants, etc. )
