The document discusses global capital markets and how they bring together investors and borrowers from around the world. It benefits both investors by providing more investment opportunities to diversify risk, and borrowers by increasing funds available and lowering the cost of capital. Factors like advances in technology and deregulation have allowed international capital markets to grow.
The document discusses global capital markets and how they bring together investors and borrowers from around the world. It benefits both investors by providing more investment opportunities to diversify risk, and borrowers by increasing funds available and lowering the cost of capital. Factors like advances in technology and deregulation have allowed international capital markets to grow.
The document discusses global capital markets and how they bring together investors and borrowers from around the world. It benefits both investors by providing more investment opportunities to diversify risk, and borrowers by increasing funds available and lowering the cost of capital. Factors like advances in technology and deregulation have allowed international capital markets to grow.
The document discusses global capital markets and how they bring together investors and borrowers from around the world. It benefits both investors by providing more investment opportunities to diversify risk, and borrowers by increasing funds available and lowering the cost of capital. Factors like advances in technology and deregulation have allowed international capital markets to grow.
brings together those who want to invest money and those who Capital market want to borrow money are the financial service companies that connect investors and Market makers borrowers, either directly or indirectly Commercial banks perform an indirect connection function. > Investment banks perform a direct connection function. > Equity loan is made when a corporation sell stock to investors. requires the corporation to repay a predetermined portion of loan > Debt loan amount (the sum of the principal plus the specified interest) at regular intervals regardless of how much profit it is making > A global capital market benefits both borrowers and investors. > It benefits borrowers by increasing the supply of funds available for borrowing and by lowering the cost of capital. Why do we need global capital markets? Why are domestic capital > It benefits investors by providing a wider range of investments market benefits both borrower and investors? opportunities, thereby allowing them to build portfolios of interna- tional investments that diversify their risk refers to movements in a stock portfolio ' s value that are attrib- utable to macroeconomic forces affecting all firms in an economy, Systematic risk rather than factors specific to an individual firm. The systematic risk is the level of nondiversifiable risk in an economy Advances in information technology and deregulation by govern- What factors allow the international capital market to bloom? ment. Actually, a misnomer because a euro currency can be created Euro currency. anywhere in the world. The persistent euro prefix reflects the European origin of the market. He distinguishes between this short-term capital or "hot money, Martin Feldstein " and "patient money" that would support long-term cross-border capital flows Hot money refers to short-term capital Patient money refers to long-term capital. eurocurrency is any currency banked outside of its country of origin. Eurodollar are dollars banked outside the United States. First, when depositors use a regulated banking system, they know that the probability of a bank failure that would cause them to lose their deposits is very low. The eurocurrency market has two drawbacks. Second, borrowing funds internationally can expose a company to foreign exchange risk Bonds re an important means of financing for many companies. fixed-rate bond. . The most common kind of bond is a foreign bonds and eurobonds. International bonds are of two types: are sold outside of the borrower's country and are denominated in Foreign bonds the currency of the country in which they are issued Yankee bonds. Foreign bonds sold in the United States are called Samurai bonds. Foreign bonds sold in Japan are bulldogs Foreign bonds sold in Great Britain are are normally underwritten by an international syndicate of banks Eurobonds and placed in countries other than the one in whose currency the bond is denominated
