Chapter 2.4 Capital Markets

Question 1

2 types of capital market instruments

Answer 1

1. Share capital
2. Debt capital

Question 2

1. Share capital

Answer 2

Ordinary share capital invites investors to take equity stake in the business or increase their existing equity stake

Question 3

2. Debt capital

Answer 3

IOUs committing a company to pay interest over a significant time periods (more than or equal to 5 years)

Question 4

Risk & return (lowest to highest risk)

Answer 4

1. Bonds / loan notes (secured)
2. Junk bonds (unsecured)
3. Shares traded on the main stock market
4. Shares in the Alternative Investment Market