What are the two critically important functions for corporate financing performed by stock exchanges?
What will be an ideal response?
First, by providing a secondhand market for stocks, stock exchanges make individual investment in a company much less risky. Investors know that if they need money, they can always sell their stocks to other investors or to stock market specialists at the current market price. This reduction in risk makes it far easier for corporations to issue new stocks.Second, the stock market determines the current price of the company’s stocks. That, in turn, determines whether it will be difficult or easy for a corporation to raise money by selling new stocks.
You might also like to view...
The ________ view says that fiscal stimulus has a multiplier effect that makes it a ________ tool to fight a deep recession
A) Keynesian; weak B) "free lunch"; powerful C) Keynesian; powerful D) mainstream; powerful E) None of the above answers is correct.
Since 1970, the world Gini ratio has ________ indicating that the world distribution of income has ________
A) risen; become more equal B) fallen; become more equal C) risen; become less equal D) not changed; not changed