All categories

2 years ago

The three main types of markets for financial capital are _______.

Business

1 answer:

slavikrds [6]2 years ago

7 0

Answer:

loan markets, bond markets, and stock markets

Explanation:

If we want to buy and sell financial assets, be it money, bonds or shares, for example, it is necessary that there are so-called financial markets. We can distinguish 3 different types of financial markets, the difference lies in the type of assets that are traded in each of them

Capital markets

In this type of market, stocks, bonds and bonds are traded. If we focus on the national level, we can distinguish several capital markets:

The stock market

Second markets for medium-sized companies

The AIAF private fixed income market

The public debt market (state, autonomous communities, municipalities…)

Currency market

In it instruments are bought and sold in different currencies. The most notable corresponds to the purchase and sale of spot and forward currencies

Money markets or loan markets

In these markets, short-term financial assets are traded, these can be interbank deposits, company notes and treasury bills. These types of markets are also called money markets.

You might be interested in

Assume the current Treasury yield curve shows that the spot rates for six months, one year, and one and a half years are 1 %1%

Ludmilka [50]

Answer:

present value of bond = $1042.96

Explanation:

given data

spot rates for six months = 1%

spot rates for one and = 1.1%

spot rates for one and half years = 1.3%

price = $1000

coupon bond = 4.25%

time = 6 month

solution

we get here first price on bond paid that is

coupon paid = $1000 × 4.25 × 0.5 = $21.25

we get here present value of 6 month and 1 year and 1 and half year

present value = $\frac{coupon\ payment }{(1+\frac{spot \ rate}{2})^t}$ ..............1

present value of 6 month = $\frac{21.25}{(1+\frac{0.1}{2})^1}$ = 20.23

present value of 1 year = $\frac{21.25}{(1+\frac{0.011}{2})^2}$ = 21.01

present value of 1 year and half year = $\frac{21.25}{(1+\frac{0.013}{2})^2}$ = 20.97

and

now we get present value of par value in 1 and half year

present value of par value in 1 and half year = $\frac{par\ value}{(1+\frac{spot rate}{2})^3}$

present value of par value in 1 and half year = $\frac{1000}{(1+\frac{0.013}{2})^3}$

present value of par value in 1 and half year = 980.75

present value of bond will be as

present value of bond = 20.23 + 21.01 + 20.97 + 980.75

present value of bond = $1042.96

5 0

2 years ago

The following information is available for two different types of businesses for the Year 1 accounting year. Hopkins CPAs is a s

Firdavs [7]

Answer:

Please see attached detailed explanation.

Explanation:

Please find attached detailed preparation of income statement, balance sheet and cash flow statement for the above.

4 0

2 years ago

James, Inc., has purchased a brand new machine to produce its High Flight line of shoes. The machine has an economic life of 6 y

inysia [295]

Answer:

James, Inc.

The financial break-even point in:

Sales unit = 8,322

Sales dollars = $724,014

Explanation:

a) Data and Calculations:

Cost of machine purchased = $594,000

Estimated economic life = 6 years

Salvage value = $0

Sales price per pair of shoes = $87

Variable cost per pair of shoes = 37

Contribution margin per pair = $50

Discounted contribution = $50 * 0.909 = $45.45

After-tax contribution = $35.45 ($45.45 * 0.78)

After-tax contribution margin ratio = $35.45/$87 * 100 = 41%

Fixed cost per year = $295,000

Corporate tax rate = 22%

Discount rate = 10%

Break-even point = Fixed cost/After-tax contribution

= $295,000/$35.45

= 8,322 units

= $724,014 ($87 * 8,322)

7 0

2 years ago

The expected return on Natter Corporation's stock is 14%. The stock's dividend is expected to grow at a constant rate of 8%, and

AlladinOne [14]

Answer: The stock price is expected to be $57 a share one year from now.

Explanation:

The stock price is expected to be $57 a share one year from now.

Expected return = 14%

current share price= $50

expected share price in a year from now = $50 x (1 + 0.14)

expected share price in a year from now = 57

5 0

2 years ago

Turnbull Co. has a target capital structure of 58% debt, 6% preferred stock, and 36% common equity. It has a before-tax cost of

Elis [28]

Answer:

Turnbull's weighted average cost of capital will be higher by 0.65% if it has to raise additional common equity capital.

Explanation:

By combining the WACC formula and retained earnings cost of capital,we will arrive at;

WACC = Debt W × after tax cost of debt + Preferred stock weight × cost of capital + Equity W × Cost of capital

= 58% × 4.92% + 6% × 9.3% + 36% × 12.4%

= 2.85% + 0.56% + 4.46%

= 7.87%

Also, using the same WACC formula and using common equity cost of capital, , we will arrive at the below;

WACC = Debt W × after tax cost of debt + preferred stock weight × cost of capital + Equity W × cost of capital

= 58% × 4.92% + 6% × 9.3% + 36% × 14.2%

= 2.85% + 0.56% + 5.11%

= 8.52%

Therefore, increase cost using common equity over retained earnings is [ 8.52% - 7.87%]

= 0.65%

N.B we arrived at 4.92% for after tax by;

Pre tax 8.2%

Current tax rate 40%

= Pre tax × ( 1 - cost of debt)

= 8.2% × ( 1 - 40%)

= 8.2% × 0.6%

= 4.92%

7 0

2 years ago

The three main types of markets for financial capital are​ _______.

The three main types of markets for financial capital are _______.