8.3 Private versus public markets Flashcards
1
Q
What is meant by “private market”?
A
Where transactions are held and executed over the counter through private securities dealers.
2
Q
What are the advantages of private markets?
A
- selective access to investors
- less competition
- usually no intermediary between buyer and seller
- greater probability of higher returns
3
Q
What are the disadvantages of private markets?
A
- investors usually do not have complete information to hand
- cannot be easily sold or purchased (less liquid)
- risky, as unregulated.
4
Q
What is meant by “public market”?
A
A market in which the general public can participate e.g. a stock exchange.
5
Q
What is a stock exchange?
A
Public market in which securities are bought and sold.
6
Q
Why are public markets more highly regulated?
A
Because exposure to the general public is greater.
7
Q
What are the advantages of public markets?
A
- no qualification or net worth criteria required
- highly regulated and transparent
- highly liquid investments
8
Q
What are the disadvantages of public markets?
A
- moderate returns
- regulated, with high compliance burden
- highly speculative market
