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Indirect Market Transaction and Market Elements

1. Give your own example of an Indirect Market Transaction. Include the company or entity, Intermediary, and purchaser/investor. What was the purpose of the transaction? What were the funds used for?

2. What is meant by the marketability of a security and the liquidity of a security? Give your own example.

3. What is meant by current assets and liabilities? What do these represent to the firm? What are some components of each?

4. What is residual cash flow? Give an example of real world residual cash flow either from your personal or professional experience.

Please include references.

Solution Preview

1. My example of an indirect market transaction is the underwriting of shares by financial institutions. The entity is the company that is raising share capital, the intermediary is the financial institution, and the purchaser/investor is the final buyer of shares and securities. The purpose of the transactions is to help the company raise capital from the share markets. The funds are used by the company for its projects, capital investment, or working capital. The financial institution engages to buy all the unsold shares in the issue of new securities.
2. Marketability of a security means the ability to trade a security at a given price in given volumes. Marketability relates ...

Solution Summary

The solution of 460 words explains indirect market transaction, marketability of security and liquidity of security, current assets and liabilities, and residual cash flow. References used are included.