Questions Chapter 14 Financial Management Principles
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Gabriela Gonzalez
Individual Assignment: from Financial Management: Principles and Applications
Chapter 14
14-1-What are financial markets? What function do they perform? How would an economy be worse off without them?
Financial market is gives opportunity to people to either trade or buy securities, like stock, bonds, and Purchases of home or insurance policy (Wikipedia, 2010). Is a market that assembles other people’s money to entrust in other company. The function of financial market is that it supplies to the economy demand.
The market helps to conduct and animate from the public or firms. Without the market we would be worse off because the government would be inflexible with their laws and ethics. For example in unfair lending practices.
14-3 Distinguish between the money and capital markets.
The capital market is a market for securities where companies or government invest in long term funds. Long term meaning is longer than a one year period. Government issues bonds to a person that invest and this way the government or the company can borrow the money with a higher interest return.
Money markets are a short term liquid funding, period not longer than thirteen month. Usually in this market the banks borrow or lends among each other or finance company (Keown, Martin, Petty, & Scott, 2005)
14-4 What major benefits do corporations and investors enjoy because of the existence of organized security exchanges?
The three benefits that corporations and investor enjoy from security exchange is one that it provides a continuous market which it gives a security in prices; when trading the price is smaller. Second establishes fair security prices which it makes the flowing of demand and supply easier to bid. Third helps “business to raise new capital since the secondary market exist the prices are determined, making it much easier for firms to float new security offerings successfully” (Keown, Martin, Petty, & Scott, 2005)...
Individual Assignment: from Financial Management: Principles and Applications
Chapter 14
14-1-What are financial markets? What function do they perform? How would an economy be worse off without them?
Financial market is gives opportunity to people to either trade or buy securities, like stock, bonds, and Purchases of home or insurance policy (Wikipedia, 2010). Is a market that assembles other people’s money to entrust in other company. The function of financial market is that it supplies to the economy demand.
The market helps to conduct and animate from the public or firms. Without the market we would be worse off because the government would be inflexible with their laws and ethics. For example in unfair lending practices.
14-3 Distinguish between the money and capital markets.
The capital market is a market for securities where companies or government invest in long term funds. Long term meaning is longer than a one year period. Government issues bonds to a person that invest and this way the government or the company can borrow the money with a higher interest return.
Money markets are a short term liquid funding, period not longer than thirteen month. Usually in this market the banks borrow or lends among each other or finance company (Keown, Martin, Petty, & Scott, 2005)
14-4 What major benefits do corporations and investors enjoy because of the existence of organized security exchanges?
The three benefits that corporations and investor enjoy from security exchange is one that it provides a continuous market which it gives a security in prices; when trading the price is smaller. Second establishes fair security prices which it makes the flowing of demand and supply easier to bid. Third helps “business to raise new capital since the secondary market exist the prices are determined, making it much easier for firms to float new security offerings successfully” (Keown, Martin, Petty, & Scott, 2005)...