FINE 2000 Chapter Notes - Chapter 2: Initial Public Offering, Nasdaq, Investment

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Document Summary

A modern financial system offers financing in many different forms depending on the company"s age, growth rate and the nature of its business. Access to financing is vital for the success of a firm (needed for growth and profitability) Money that corporations invest in real assets comes from savings by investors. General flow: investors buy stocks financial manager helps purchase real assets for firm"s operations, profit generated from firm can either by returned to shareholders or reinvested in firm. Reinvestment represents additional savings on behalf of shareholders as cash is saved and invested on behalf of the firm"s shareholders. For larger corporations, money can flow through financial markets and financial intermediaries or both before being received by the corporation. Primary market: market for sale of new securities by a corporation. Established firms can issue new shares from time to time; called seasoned equity offers. First issue is called an initial public offering (ipo) or follow-on offers.

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