Rachel Vishnevsky University of Phoenix Cindy BayerOctober 29, 2006Managerial Finance FIN 475The U. S. financial marketplace consists of borrowing,lending,investing, and management of assets and liabilities.
The following articlewill discuss various financial markets and how the Federal Reserve ismonitoring their economic standing on a quarterly and annually basis. Thenecessity of investment bankers and sources of capital available tocorporations will be addressed. Finally, raising short-term and long-termcapital will be conferred. Financial Market consists of various sectors: households and nonprofitorganizations, nonfinancial business, state and local governments, federalgovernment, foreign market places, monetary authority, commercial banking,savings institutions, credit unions, property-casualty insurance companies,life insurance companies, private pension funds, state and local governmentemployee retirement funds, federal government retirement funds, moneymarket mutual funds, mutual funds, closed-end and exchange-traded funds,government-sponsored enterprises, agency and GSE- backed mortgage pools,issuers of Asset-Baked Securities,Financecompanies,realestateinvestment trust, security brokers and dealers, and funding corporations. These various sectors are quarterly and annually reported on through theFlow of Funds issued by the Federal Reserve and considered to be most in-depth data available on the financial markets economic standing. Investment Bankers role is the representative ofafinancialorganization that is in business for earning revenue for corporations.
Investment bankers’ roles consist of advising clients, dealing with bonds,mergers, and the sale of stock. Financial analysis is the foundation ofinvestment bankers. Sources of capital available to corporations fall into two categories:equity financing, and debt financing. Equity financing is the investment ofrevenue for exchange of part ownership.
Debt financing is borrowing torepay with interest. Commercial banks, commercial financecompanies,leasing companies, and state and local government lending programs allprovide for debt financing. Sources for equity capital consist of privateinvestors, institutional venture- capital firms, mergers and acquisitions,strategic investors and corporate venture capitalists, overseas investors,and intermediaries. Business owners have a wide variety of capital sourcesavailable to them. The sources of capital vary in cost, terms, andcollateral.
Raising short-term and long-term capital fall into three main sources:shareholders’ equity, borrowed funds, and reserves. Three types of financeare short, medium, and long-term. Short-term finance is generally the fundsrequired to run a business or the operating expense. Short-term finance isgenerally more costly and must not be used for long-term projects. Short-term finance can come from the following bank overdraft, commercial bill,and debtor finance. Medium term finance is capital that is in 3-10 yearrange and comes from the following forms: term loans, personal loans, andleasing.
Long-term finance is the purchase of various assets such as plant,machinery, land, businesses, and building that are anticipated to recover aprofit over a given number of years. Financial markets assist in helping borrowers find lenders. Banks andother intermediaries use deposit money for individual who seek to borrowand distribute in the form of mortgages and loans. The goal set forth by most organizations is to leverage the businesscash. The more long-term the greater the financial leverage. Additionalcapital is an investment and several tools are available for informedinvestment decisions.
The SEC (Securities and Exchange Committee) hasseveral rules that need to be adhered to and will address questions setforth by organizations. It is crucial to evaluate the use of attainment ofadditional capital in terms of the current business plan in place. Severalquestions must be addressed in regards towards the capital: the need, theurgency, current risks, purposes, current market standing, and overallprofitability in contrast to current risk. The role of the U.
S. Financial system is to monitor and report data aswell as offer small businesses and corporation the guidance and authorityneeded. Investment bankers are the intermediaries that communicate properguidelines between authorities and corporation in relation to currentinvestments. Several sources of capital are available in the current daymarketplace therefore it is essential for outmost scrutiny and analysisupon decision of analysis for uses of capital in thecorporation. Regulatory agencies are becoming stricter and auditing more corporations. Equity financing and debt financing have requirements that mustbecarefully followed to avoid penalty.
U. S. Financial System has properdisclosure of informationneededforraisingcapitalwithinanorganization; it is the investment bankers of financial managers’ role toseek out the information need for a capital gain on capital raised. ReferencesFinancial Markets Center; U. S.
Economy and Financial Markets. (n. d. ).
Retrieved on October 28, fromhttp://www. fmcenter. org/site/pp. asp?c=8fLGJTOyHpE;b=224802Investment Banking Wikipedia, Free Online Encyclopedia (n. d.
). Retrieved onOctober 28, fromhttp://en.wikipedia.org/wiki/Investment_bank#Raising_capital_in_the_capital_marketsNSW Small
