Chapter 1

Question 1

What are Financial Markets?

Answer 1

Financial markets are generally where companies can raise short- and long-term finance

Question 2

What is the difference between money- and Capital- markets ?

Answer 2

Money: For short-term financing, includes instruments such as treasury bills, commercial paper and certificates of deposit

Capital: For long-term financing, includes instruments such as issue of debt, equity, and derivatives

Question 3

What are primary and secondary Markets

Answer 3

Primary: Markets for raising finances through new issues

Secondary: For trading of existing instruments (equity, debt, derivatives)

Question 4

What are advisors in regards to capital markets ?

Answer 4

Advisors are the required parties that need to be consulted to request a listing

Question 5

What are some different types of advisors ?

Answer 5

Sponsor: Advises the board and coordinates the process

Bookrunner: Finds investors and establishes price

Lawyer: Due diligence and draft prospectus

Financial Rep Acc: Financial due diligence and tax advice

Financial PR: Communication Strategy