Chapter 1: The Capital Market [Simplified CSC Notes]
• Capital is not what you make but what you keep
• Wealth is savings, capital comes from savings
• Savers: Individuals, corporations, governments …show more content…
Short term debt deal with own bank or in the money market. While long term debt can take a couple of forms, they can issue bonds and debentures. Bonds can be seen as secured debt and debentures as unsecured debt.
3) Governments, they need money to maintain a viable functioning economy. There's 3 levels of government; federal, provincial, and municipal.
Why is Capital needed? To invest in productive assets. If there was no savings, businesses could not have built huge factories until they had the money to do it
Financial Instruments
• Debt come in the form of bonds, debentures, mortgages, t-bills, commercial paper
• Debt can be both long term and short term
• Financial instruments that are publicly traded operate both sides of the market, entire debt financial instruments are called fixed income
• Equity comes in the form of common and preferred shares, savers can transfer their money to users by purchasing common and preferred shares.
• Investment Funds, this is neither debt nor equity. You buy shares of this fund and this fund will go out and do things like mutual funds.
• There are other types of instruments like linked notes or exchanged traded funds …show more content…
Dragon's Den). Where do these people get their money? Pension funds, endowments, Angel Investors are just high net worth individuals that also invest in venture capital and private equity
• But why? If there are public markets and public instruments you can trade readily and there's always a buyer and seller for them in liquid markets, why would anybody take their money and put it in a private investment that doesn't have a buyer or seller? It's because of Return Enhancement. It means private equity has average higher returns than public financial instruments.
• So what type of investments do private equity deal with? Leveraged Buyouts - when the management of a company decides it wants to take over the company from the owners, puts down a small amount of money and leverages it with debt to buy it out. In other words growth capital which is seen in Dragon's Den as the early stage of venture capitalists. Typically where Angel Investors or venture capitalist would offer money privately. Late stage is also dominated by venture capitalist and private equity plays an important role.
• Turnarounds and distressed debt are mostly financed by private
• Capital is not what you make but what you keep
• Wealth is savings, capital comes from savings
• Savers: Individuals, corporations, governments …show more content…
Short term debt deal with own bank or in the money market. While long term debt can take a couple of forms, they can issue bonds and debentures. Bonds can be seen as secured debt and debentures as unsecured debt.
3) Governments, they need money to maintain a viable functioning economy. There's 3 levels of government; federal, provincial, and municipal.
Why is Capital needed? To invest in productive assets. If there was no savings, businesses could not have built huge factories until they had the money to do it
Financial Instruments
• Debt come in the form of bonds, debentures, mortgages, t-bills, commercial paper
• Debt can be both long term and short term
• Financial instruments that are publicly traded operate both sides of the market, entire debt financial instruments are called fixed income
• Equity comes in the form of common and preferred shares, savers can transfer their money to users by purchasing common and preferred shares.
• Investment Funds, this is neither debt nor equity. You buy shares of this fund and this fund will go out and do things like mutual funds.
• There are other types of instruments like linked notes or exchanged traded funds …show more content…
Dragon's Den). Where do these people get their money? Pension funds, endowments, Angel Investors are just high net worth individuals that also invest in venture capital and private equity
• But why? If there are public markets and public instruments you can trade readily and there's always a buyer and seller for them in liquid markets, why would anybody take their money and put it in a private investment that doesn't have a buyer or seller? It's because of Return Enhancement. It means private equity has average higher returns than public financial instruments.
• So what type of investments do private equity deal with? Leveraged Buyouts - when the management of a company decides it wants to take over the company from the owners, puts down a small amount of money and leverages it with debt to buy it out. In other words growth capital which is seen in Dragon's Den as the early stage of venture capitalists. Typically where Angel Investors or venture capitalist would offer money privately. Late stage is also dominated by venture capitalist and private equity plays an important role.
• Turnarounds and distressed debt are mostly financed by private