Role of corporations Flashcards
(10 cards)
What is the primary way corporations raise funds in financial markets?
By issuing stocks (equity) and bonds (debt) in the primary market.
What is the purpose of the primary market for corporations?
It allows corporations to directly raise capital from investors.
What happens in the secondary market involving corporations?
Corporate securities are traded between investors, enhancing liquidity and market valuation.
How do corporations benefit from active secondary markets?
It improves their ability to raise future capital and reflects their market value.
What disclosures are corporations required to make in public markets?
Financial statements, earnings reports, and governance practices.
Why is corporate transparency important in financial markets?
It builds investor trust and supports efficient markets.
How do corporations impact economic growth through financial markets?
By creating jobs, producing goods/services, and driving innovation.
In what ways do corporations participate as investors themselves?
Holding cash reserves, using derivatives for hedging, and engaging in M&A activity.
Why are corporations crucial to stock indices like the S&P 500?
Their performance drives index values, reflecting economic health.
What overarching role do corporations play in financial markets?
They fund, fuel, and interact with markets to allocate capital efficiently.
