Textbook Notes (362,882)
Canada (158,081)
MGTA02H3 (361)
Chapter 11

Chapter 11- Understanding Shares and Other Investments

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University of Toronto Scarborough
Management (MGT)
Bill Mc Conkey

Chapter 11 Understanding Shares and Other Investments1 Explain the differences between primary and secondary securities marketsSECURITIES MARKETSSecurities stocks and bonds which represent a securedassetbased claim on the part of investors that can be bought and soldHolders of stocks and bonds have a stake in the business that issued hemStockholders have claims on some of a corporations assets and a say in how the company is run because each share represents part ownershipBonds represent financial claims for money owed to holders by a companySecurities markets the markets in which stocks and bonds are soldPrimary and Secondary Markets for SecuritiesPrimary securities market the sale and purchase of newly issued stocks and bonds by firms or governmentsSold to one buyer or a small group of buyersRepresent a small portion of securities tradedPrivate placements allow the businesses that use new securities to keep their plan confidentialInvestment BankingInvestment banker any financial institution engaged in purchasing and reselling new stocks and bondsServe as financial specialists in issuing new securitiesProvide 3 types of investment banking servicesoAdvise the company on the timing and financial terms for the new issueoBy buying the new securities investment bankers bear some of the risk of issuing the new securityoCreate the distribution network that moves the new securities through groups of other banks and brokers into the hands of individual investorsSecondary securities market the sale and purchase of previously issued stocks and bonds2 Discuss the value of common shares and preferred shares to shareholders and describe the secondary market for each type of securitySTOCKSHas become easier to buy and sell stocks because of the availability of different types of stocks and markets have established for conveniently buying and selling themCommon SharesBuy common shares in the hope that the shares will increase in value which can get a capital gain andor provide dividend income1
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