Summary of chapter 10 Essay Example | Topics and Well Written Essays - 250 words

Summary of chapter 10 - Essay Example This is unlike the case in dividends on stock; thus, stockholders are less likely to acquire financial returns as compared to bondholders (Kelly & McGowen 135). Trading securities markets are of two types; primary and secondary markets. Primary securities market refers to when corporations gain more financial capital by selling new securities (Kelly & McGowen 137). On the other hand, secondary securities market trades the previous securities to gain financial capital. Issuing of securities in the primary market occurs in two methods, that is, through a public offering or private placements. Private placements are faster, easier and cheaper as compared to a public offering (Kelly & McGowen 138). In the secondary market, the firms that issue bonds and stock do not receive additional finance when they trade their securities. However, an advantage to the firm is that, at secondary market price, of their stock reflects the investor opinion about the firm’s management (Kelly & McGowen 138). Investors need to keep track on the performance of securities in the market. A major way is to track stock indices. These include; Dow Jones Industrial average, Standard and Poor’s 500 and the NASDAQ Composite Index. These indices help to update the investor and guide him or her in the way of investing (Kelly & McGowen