BU283 Lecture Notes - Lecture 3: Moral Hazard, Financial System, Sole Proprietorship
Document Summary
Money markets: short term, highly liquid, mature in less than 1 year from issue date, provides a low-cost source of temporary funds. Capital markets: securities have an original maturity greater than 1 year, long term investments by companies and government in projects like factories. The role of secondary markets: market for shares: provide the means for investors to tailor their investment horizons. Characteristics of secondary markets: accurate pricing of shares, liquidity. Governance refers to the way an organization is formed, structured, and controlled. A type of business entity owned and run by one person. A type of business entity owned and run by two or more persons who have agreed to work together. Legal regulated form of business no licence, charter, or agreement legally required. No conflict between owner and manager manager acts in owner"s best interests. Unlimited liability owner responsible for all business debts. No access to capital markets just bank lending.
