Understanding business 8th by mcchugh nickels chapter 19

Financing and Investing Opportunities19... • Investment never has to be repaid• Not legally obligated to pay... * Corporate Bonds Municipal Bonds US Treasury Bonds From 1 to 20 years F

Financing and

Investing Opportunities19

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Functions of Securities Markets

• Long-Term

Funding for Businesses

• Place to Buy/Sell

Securities (Investments)

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• Assist Sale/Issue of New Securities

• Underwrite issues

• Sells to Institutional Investors

• Investment never has to be repaid

• Not legally obligated to pay

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Organized Securities Exchanges

• New York Stock

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Corporate Bonds Municipal Bonds US Treasury Bonds From 1 to 20 years From 1 to 40 years From 2 to 30 years

Taxable

Exempt from federal taxes and some state and local taxes

Exempt from state and local taxes

May be riskier than

government bonds,

but may have higher

Attractive to investors in high tax

Government backing provides maximum

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Likelihood of Investing In Bonds

the ’80s

Lower Price increases Demand

Increased demand increases price

• Junk Bonds

• Commodities

• Safety & Risk

• Income & Total

Return

$100 per share

Step 2

However, the investor has only $4,000

Step 3

The investor finds he is able to buy the stock with a 40%

margin

Step

The investor puts up

$4,000 and borrows

• Company Name & Stock Symbol

• Last Dividend Per Share

• Dividend Yield

• P/E Ratio

• # of Shares Traded

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Refining Co.

& Railroad Co.

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How Much Have They Grown?