BA 213 Lecture Notes - Lecture 4: Financial Market, Capital Market, Financial Institution
Document Summary
Financial markets are structures through which funds flow. Financial markets can be distinguished along two major dimensions: (1) primary versus secondary markets and (2) money versus capital markets. Primary markets are markets in which users of funds (e. g. , corporations) raise funds through new issues of financial instruments, such as stocks and bonds. Companies which need to raise additional funds, may issue new shares to the public through the financial institutions for the first time. This is usually done through financial institutions called the investment banks. Initial public offer (ipo) means offering the stocks to the public for the first time. It involves a private company becoming public company by issuing the stocks to the public. Once financial instruments such as stocks are issued in primary markets, they are then traded that is, rebought and resold in secondary markets. Once a company is listed on the stock market, the shares can be rebought and resold at any time.
