CP

Secondary Markets Financial institutions play a key role in matching primary market players who need money with those who have e ...

willing to buy or sell. Computerized quotation systems keep track of all bid and ask prices, but they don’t actually match buyer ...

a customer who wants to buy shares of AT&T stock. Simultaneously, Morgan Stan- ley’s Denver office might receive an order fr ...

market in the stock. Nasdaq has more than 400 dealers, most making markets in a large number of stocks. The typical stock has ab ...

to as Nasdaq, but stocks continue to be traded and reported separately on the two markets. Increased competition among global st ...

in the future on a one-for-one basis. On the other hand, Mr. Friday might have a wife and several young children and need his cu ...

securities in Market A.^7 Borrowers whose credit is strong enough to borrow in this market can obtain funds at a cost of 10 perc ...

States. There are markets for home loans; farm loans; business loans; federal, state, and local government loans; and consumer l ...

30 CHAPTER 1 An Overview of Corporate Finance and the Financial Environment on other prices and easing fears of serious long-ter ...

The Determinants of Market Interest Rates 31 producers and other corporations from raising prices as they had in the past, and t ...

DRP default risk premium. This premium reflects the possibility that the issuer will not pay interest or principal at the state ...

The Nominal, or Quoted, Risk-Free Rate of Interest, rRF The nominal,or quoted, risk-free rate, rRF,is the real risk-free rate pl ...

percent, and the yield on one-year T-bills was about 2.43 percent, so the real risk-free rate on short-term securities at that t ...

Rate DRP U.S. Treasury 5.5% — AAA 6.5 1.0% AA 6.8 1.3 A 7.3 1.8 BBB 7.9 2.4 BB 10.5 5.0 The difference between the quoted inter ...

measure, but (1) it varies somewhat over time, rising when interest rates are more volatile and uncertain, then falling when int ...

numberofwebsites,includingBloomberg,Yahoo,andCNNFinancial.Frominterest rate data obtained from these sources, we can construct t ...

constructed corporate curves and plotted them on Figure 1-6, they would have been above those for Treasury securities because co ...

economic downturns, because weaker economic conditions tend to be correlated with declining inflation, which in turn leads to lo ...

40 CHAPTER 1 An Overview of Corporate Finance and the Financial Environment Longer-term corporate bonds are also less liquid tha ...

Using the Yield Curve to Estimate Future Interest Rates 41 corporate bonds and Treasury bonds is larger the longer the maturity. ...