Fin/370 Finance for Business Essay

1814 Words Oct 30th, 2011 8 Pages
Individual Paper: Workshop 1 – Discussion Questions “DQ”
University of Phoenix – FIN/370
Finance for Business
Week 1

Workshop 1 – Discussion Questions
This paper will explore the discussion questions for the first of five workshops of Finance for Business. The three topics include: 1) The capital market, how the primary market differs from the secondary market, and in the student’s opinion are these markets efficient, and why.
2) The three primary roles of the U.S. Securities and Exchange Commission, how the Sarbanes-Oxley Act of 2002 augments the SEC’s role in managing financial governance, and if the writer thinks the passage of this act had the outcome of businesses becoming more ethical. Examples will be used to
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Once the newly issued stock is purchased by the public, it begins trading in the secondary market. Previously issued securities will be traded in the secondary market.
“Companies and governments use capital markets to raise funds for their operations; for example, a company may issue an IPO while a government may issue a bond in order to conduct new or expand ongoing activities. Investors purchase securities in the capital markets in order to extract a return and earn profit on the securities. Capital markets include primary markets, such as IPOs that are placed with investors through underwriters, and secondary markets, in which all subsequent trading takes place. Government agencies in different countries regulate local capital markets, though some, especially exchanges, play some role in regulating themselves.” (Farlex Financial Dictionary 2009)
In the student’s opinion these markets are sometimes efficient, based on the definition of an efficient capital market in which the market is quick and the prices are right. However when profit maximization is the absolute goal without a combined goal of long-term growth and health of an organization, short cuts to profitability may not always be efficient. A delicate balance between short-term profitability and long-term wisdom must be reviewed in light of the expectations of the stakeholders. If they are in it for the short-run, having an efficient capital market

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