Financial Markets & Participants

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Financial Markets & Participants

Lecture number:
Lecture Note
University of Texas at Austin
Fin 320f - Foundations of Finance

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Lecture 3 Outline of Current Lecture  Stock exchange vs OTC market  Primary vs Secondary markets  The IPO Process  Capital market vs. money market  Broker vs. dealer  Financial intermediaries  Best-effort basis  SEC regulation Current Lecture  Equity market vs. debt market  Stock market vs. bond market  Stock exchange vs. over-the-counter market  Primary market vs. secondary market  Capital market vs. money market  A stock exchange (market) is a physical or virtual place where securities are traded  The New York Stock Exchange is an organized, physical exchange  The Nasdaq is an organized, virtual exchange  The OTC market is not an exchange  Trading is directly between buyer and seller  Examples: Pink Sheets, OTC Bulletin Board  During eBay’s 1998 IPO, it offered 3.5M (9%) of its shares to the public at $18 per share  In 1999, eBay offered an additional 6.5M shares to the public at $270 per share  4.25M shares were offered by the company  2.25M shares were offered by insiders  On Jan 30, 2015, eBay closed at $53.00  Long-term financial instruments trade in capital markets  Short-term financial instruments trade in money markets FIN 320F

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