Ethics and Compliance Paper

Ethics and Compliance Paper

Justin Barr

FIN/370

June 24, 2012

Irene Lien

Financial Markets in the United States

Economies around the world operate in a financial market. The United States economy is no different. Simply put, a financial market is a place where money and credit are exchanged (Titman, et al, 2011). Financial markets in the United States operate through three entities, which include borrowers, savers, and financial institutions. Borrowers are those who need money to finance their purchase (Titman, et al, 2011). Any entity or individual looking for money to finance a purchase may be considered a borrower. In the United States, this can even include those looking to borrow money to make even the smallest of purchases. The second type of entity in the United States financial market is known as the savers. The savers, also known as investors, are considered those who save money to make purchases in the future (Titman, et al, 2011). A person saving to purchase a vehicle or a company that saves excess revenue are examples of savers. Financial institutions are the last type of entity present in the United States financial market. Here the borrowers and savers are brought together, and were saving and lending both taking place (Titman, et al, 2011). One common example of a financial institution in the United States is that of a commercial bank. However, there are also other types of financial institutions.

In relation to Starbucks, the financial market in the United States works a certain way. Starbucks is a publicly traded corporation that borrows money to operate their business. Additionally, they receive revenue from the sales they make from the type of business they operate. When Starbucks was formed, they borrowed money from a financial institution to fund their startup costs. When they formed their corporation, Starbucks sold shares in their company to generate operating funds for their...