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1、IntroductiontoBusinessLawHowarecapitalmarketsdifferentfromthemoneymarkets?Themoneymarketsareusedforraisingshorttermfinance,whereasthecapitalmarketsareusedfortheraisingoflongtermfinanceMoneymarketsareusuallyusedforgeneraloperatingexpenses,suchascoveringbriefperiodsofilli
2、quidity,whilecapitalmarketsareoftenusedtoacquirecapitaltoinvestinadditionalphysicalcapitalgoods,whichwillhelpincreasethefirm’sincomeHowarecapitalmarketsdifferentfrombanklending?Witharegularbankloan,thelendingisnotsecuritized(i.e.,itdoesn’ttaketheformofresalablesecurityl
3、ikeashareorbondthatcanbetradedonthemarkets)LendingfrombanksandsimilarinstitutionsissubjecttodifferentregulationsfromcapitalmarketlendingCapitalmarketinvestorsprobablyoftenhaveahigherappetiteforriskthanbanksHowdofirmssellsecuritiesontothemarket?Companiessellnewstockorbon
4、dsinpublicofferingstoinvestorsviaamechanismknownasunderwritingWhoareunderwriters?Usuallyinvestmentbanks,whoraiseinvestmentcapitalfrominvestorsonbehalfofcorporationsandgovernmentsthatareissuingsecuritiesHowdounderwritersmakemoney?Theymaketheirincomefromthepricedifference
5、(the“underwritingspread”)betweenthepricetheypaytheissuerandwhattheycollectfrominvestorsorfrombroker-dealerswhobuyportionsoftheofferingHowdoinvestorssellsecuritiesontothemarketafterthey’vepurchasedsecuritiesinpublicofferings?Investorssellonthesecondarymarkets(suchasNYSEa
6、ndNASDAQ)Ontheprimarymarket,eachsecuritycanbesoldonlyonce,butonsecondarymarkets,thereisnolimitonthenumberoftimesasecuritycanbetradedWhydosecondarymarketsgenerallyhelptheissuerfirms?Transactionsonthesecondarymarketsdon’tdirectlyhelpraisefinanceforfirms,buttheydomakeiteas
7、ierforcompaniestoraisefinanceontheprimarymarket,asinvestorsknowiftheywanttogettheirmoneybackinahurry,theywillusuallybeeasilyabletoreselltheirsecuritiesonthemarketHenryManne,MergersandtheMarketforCorporateControlAtthetimeofManne’sarticle,whatantitrustruleswereintheproces
8、sofbeingweakened?Rulesagainsttie-ins,verticalmergers,predatorycompetition,amongothers,havebeenweakenedWhatisat
