Chapter 2: Financial Markets and Institutions

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Chapter 2: Financial Markets and Institutions by Mind Map: Chapter 2: Financial Markets and Institutions

1. 2.3 Financial Institutions

1.1. Investment Bank

1.1.1. Underwrite and distribute new securities => help business obtain finance

1.2. Comercial Bank

1.2.1. Take deposit, make loans

1.3. Financial Service Corporation

1.3.1. Investment Banking, Brokerage Operations, Insurance, Commercial Banking

1.4. Credit Unions

1.4.1. Members loan among members

1.4.2. Cheapest source

1.5. Pension Funds

1.5.1. Retirement plans funded

1.5.2. Invest in bonds, stocks, mortgages and real estates

2. 2.4 The Stock Market

2.1. 2.4a Physical Location Stock Exchanges

2.1.1. Tangible physical location

2.1.2. Listed (designated) securities

2.2. 2.4b Over-the-Counter (OTC) and the Nasdaq Stock Markets

2.2.1. Collection of brokers and dealers

2.2.2. Connect by telephones and computers

2.2.3. Trade unlisted securities

3. 2.5 The market for common stock

3.1. Closely Held Corporation

3.1.1. Owned by a few individuals <75

3.1.2. Associated with the firm's management

3.2. Public Owned Corporation

3.2.1. Owned by a large numbers of individuals

3.2.2. Not actively involved in the firm's management

3.3. Going Public

3.4. Initial Public Offering (IPO)

4. 2.2 Financial Markets

4.1. Physical asset VS Financial asset

4.1.1. Real, tangible, wheat, autos, real estate, computer, machinery VS Stocks, bonds, notes, mortgates

4.2. Spot VS Future

4.2.1. On the spot VS Future day

4.3. Money VS Capital

4.3.1. Short periods (< 1 year) VS Intermediate, long-term debts (>= 1 year)

4.4. Primary VS Secondary

4.4.1. Raise capital, new securities VS trade among investors, issued securities

4.5. Private VS Public

4.5.1. Directly between 2 parties VS Traded on organized exchanges