Faith Integration

Liberty University

Module 7 – Faith Integration

BUSI530

1 October 2012

Capital Market

“The markets for long-term debt and equity are called capital markets (Brealey, Myers, & Marcus, p. 36). Companies and the government utilize the capital market to raise funds for their organization long-term. Financial regulators manage the capital market to protect investors from fraudulent activity. The capital market is made up of a primary and secondary market.

The primary market is where companies allocate new securities directly to investors for funding. The primary market is used to start a business, build upon an existing business or to modernize a business. An investor may conduct much research on a company before deciding to embark on a new venture with the company. He or she will look at current trends and perceived market value, amongst other data, before making or changing their investment decision.

The secondary market is more familiar to most people than the primary market. The secondary market includes the New York Stock Exchange. This is where stocks are traded between different entities and are normally the ones who purchase the securities that were in the primary market to start with. This is where greed can settle. A trader watches the secondary market to watch any changes in their investment. Since the stock market is liquid, it changes constantly and the investor can gain more money, which in turn can gain more money for the company who can then issue additional securities back into the primary market.

“Corporate finance and capital markets rely heavily on the ability of companies and other firms to develop what is known as reputational capital (Macey, 2010).” Building a reputation inevitably builds investors. At this point in any market, it is important to have a baseline reputation that is based on the merits of integrity and honesty. Without these merits, companies will not obtain investors.

Solomon said “Divide...