The Canadian Investment Marketplace. CHAPTER 1: The Capital Market. CSI Global Education Inc. Chapter1---The Capital Market. Chapter outline: What is investment capital ? What are the sources and users of capital? What are the financial instruments ? What are the financial market ?.
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CHAPTER 1: The Capital Market
CSI Global Education Inc.
What is investment capital?
What are the sources and users of capital?
What are the financial instruments?
What are the financial market?
“To bring together suppliers and users of funds.”
Financial markets drive economic growth by transferring
Money from those who have it (savers)-------->those who
need it (users)
Three key components of the securities industry:
example: land and buildings ,savings,
stocks and bonds,
—Direct Investment ,
(e.g., land, building, equipment)
— Indirect Investment
(e.g., stock, bonds, treasury bills)
Why do we say that capital is:
monetary policy ; opportunities ;labor force
“The only source of capital is savings.”
What are the implications of this for the economy and for the operation of financial markets?
Individuals through savings
pension fund or mutual fund company
Foreign Direct Investment
All levels of Government:
bond is secured by specific assets, debenture is
secured only by the general credit of the issuer
common shares and preferred shares
IPO---initial public offering
secondary market provides liquidity
liquid market is characterized by:
By Method of Operation
OTC (over-the-counter )market= dealer market
Almost all bonds and debentures are sold through dealer markets.
A marketplace where buyers and sellers of securities meet under competitive conditions to trade with each other, and where prices are established according to the laws of supply and demand.
What are the criteria for a stock exchange to function efficiently?
1. Low transaction costs
3. Timely and accurate information on price and volume
4. Consumer protection
Liquidity is fundamental to the operation of a stock exchange.
Liquidity is characterized by:
using public means.
to obtain financing when issuing equity in the public markets
may prove difficult or impossible.
Several means used:
Leveraged Buyout Early Stage Venture Capital
Growth Capital Late Venture Capital
Turnaround Distressed Debt
over the last 25 years.
and wealthy individuals are the main investors
in the private equity market.