Chapter 11. Securities Markets
Chapter Learning Objectives: AFTER STUDYING THIS CHAPTER, YOU SHOULD BE ABLE TO:
Describe the processes and institutions used by businesses to distribute new securities to the investing public.
Outline the recent difficulties and changes in structure of the investment banking industry.
Describe how securities are traded among investors.
Identify the regulatory mechanisms by which the securities exchanges and the over-the-counter markets are controlled.
Explain influences that affect broker commissions.
Where We Have Been...
For the savings process to work, funds must be routed from savings to the users of funds. Banks and other financial institutions assist with this process; so do securities markets. Chapter 10 introduced us to the characteristics of stocks and bonds, how they can be priced using time value concepts, and the risks that investors face when holding them. Supply and demand forces in financial markets set market prices for securities. Interest rates and asset prices rise and fall based upon investors' and issuers' desires to buy and sell securities.
Where We Are Going...
The process of raising funds in securities markets is important for business firms. A firm's ability to raise funds will be the topic of future chapters: long-term fund raising is the focus of Chapter 18's capital structure discussion and short-term financing is discussed in Chapter 16.
How Does This Chapter Apply to Me...
Securities markets—typically the secondary markets such ...
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