The Global Capital Market Essay

3173 Words Mar 27th, 2016 13 Pages
The Global Capital Market

Learning objectives

• Articulate the benefits of the global capital market.

• Understand why the global capital market has grown so rapidly over the last quarter century.

• Be familiar with the risks associated with the globalization of capital markets.

• Appreciate the risks and benefits associated with the Eurocurrency market, the global bond market, and the global equity markets.

• Understand how foreign exchange risk impacts upon the cost of capital.

This chapter discusses the form and function of the global capital market. The market is attractive because its size lowers the cost of capital for borrowers, and allows investors to diversify their
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Encourage students to comprehend the significance and implications of the growth of the global capital market by asking them to imagine a world where firms were limited to their domestic market as a source of funds or investment opportunities.

Ask students to identify the advantages of this type of world, and then the disadvantages.

Finally, ask students to consider which type of system is better – the one that was in place twenty years ago, or the current system.

OPENING CASE: Industrial and Commercial Bank of China

Summary

The opening case discusses the effort by the Industrial and Commercial Bank of China, or ICBC, to raise money in the global capital market. ICBC

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