Womack Report

September 6, 2007

Banking and Finance, September 4

Filed under: Economics,Notes,School — Phillip Womack @ 8:59 am

Low attendance. First quiz today, at end of class.

It’s necessary for financial markets to exist because of the difficulty/expense of buyers and sellers connecting with each other.

Capital goods are goods used for producing other goods or services. Consumer goods are goods which are end-products.

Securities include both stocks and bonds. Government securities are normally only bonds, as governments don’t normally issue publicly traded stocks.

Primary and secondary markets for stocks and bonds. The primary market for stocks is where the stocks are issued initially. The secondary market is any place where stocks are bought or sold besides the initial offering. Stock markets are secondary markets.

Know about IPOs to raise money.

Stocks are usually traded in bundles of one hundred shares. The stock needs to be sold at some point where the price of 100 shares is attractive to investors. If the stock price is too high, smaller investors will be unable to purchase a whole lot, which will cause slowdowns in processing. This deters smaller investors. If the price is too low, there’s a perception that the stock isn’t valuable, and should be avoided.

A broker is a person who serves as an intermediary in stock transactions.

Equity are shares of ownership in a corporation or organization. Stocks are equities. Bonds are not equities.

Treasury notes and Treasury Bonds are long-term debt instruments. Treasury notes mature in two to ten years. Treasury Bonds mature in ten years or more.

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