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Lecture Retail and merchant banking – Lecture 9

After studying this chapter you will be able to understand: What is capital market? What is primary and secondary markets? What is IPOs? What is Underwriter means? What is the difference between Retail banking and Merchant banking? Four names of merchant banks? | Revise Lecture 9 Revise Lecture 9 Q1: What is capital market? Revise Lecture 9 Q2: What is primary and secondary markets? Revise Lecture 9 Q3: What is IPOs? Revise Lecture 9 Q4: What is Underwriter means? Revise Lecture 9 Q5: What is the difference between Retail banking and Merchant banking? Revise Lecture 9 Q6: Four names of merchant banks? Lecture 10 Capital Market Instruments Capital Market Instruments If a company needs to raise funds for the long-term, it can access the capital markets. The following are the different types of capital market instruments; Capital Market Instruments Bonds Junk Bonds (unsecured) Debentures / Loan notes (secured on an asset or by covenants) Preference Shares traded on the main stock market Shares in Alternative investment market - AIM Capital Market Instruments Bonds: A bond is a debt investment with which the investor loans money to an entity (company or government) that borrows the funds for a defined period of time at a specified interest rate. . | Revise Lecture 9 Revise Lecture 9 Q1: What is capital market? Revise Lecture 9 Q2: What is primary and secondary markets? Revise Lecture 9 Q3: What is IPOs? Revise Lecture 9 Q4: What is Underwriter means? Revise Lecture 9 Q5: What is the difference between Retail banking and Merchant banking? Revise Lecture 9 Q6: Four names of merchant banks? Lecture 10 Capital Market Instruments Capital Market Instruments If a company needs to raise funds for the long-term, it can access the capital markets. The following are the different types of capital market instruments; Capital Market Instruments Bonds Junk Bonds (unsecured) Debentures / Loan notes (secured on an asset or by covenants) Preference Shares traded on the main stock market Shares in Alternative investment market - AIM Capital Market Instruments Bonds: A bond is a debt investment with which the investor loans money to an entity (company or government) that borrows the funds for a defined period of time at a specified interest rate. Capital Market Instruments Junk Bond: A bond with a credit rating BB or lower issued for leveraged buyouts and other takeovers by companies with questionable credit. The interest rate is higher in order to compensate holders for that risk. A bond rated usually BB or lower because of its high default risk. Also known as a High-yield bond. Capital Market Instruments Debenture: A debenture (also called a note) is an unsecured corporate bond or a corporate bond that does not have a certain line of income or equipment to guarantee repayment of principal upon the bond’s maturity. A debenture is the most common forms of long-term loan taken by a company. Capital Market Instruments Debenture: Debentures are medium to long-term debt instrument used by large companies to obtain funds. A corporation receives an advantage when it issues debentures because it means that the company does not have to set aside certain assets or income in order to guarantee against its default in paying back the .