Reading Notes - Chapter 1

Question 1

what are the four main types of financial markets?

Answer 1

• debt securities markets
• derivative securities markets
• equity securities markets
• foreign exchange markets

Question 2

what are the two ways corporations can raise funds?

Answer 2

private placement (issuing new common stocks directly to specific investors)

public offering (involves selling new common stocks to the general public)

Question 3

what is a depository financial institution?

Answer 3

a financial institution whose main source of funds is deposits from customers.

(e.g., banks, credit unions, savings & loans institutions)