Money market and capital market
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A) Compare and contrast the characteristics of the securities of the money market with those of the capital market.
b) Compare and contrast common stock from preferred stock. What are the important characteristics of each from the INVESTORS' perspective? Why would an investor purchase one or the other? (Note that over 95% of stock is common and many - especially large tech firms - do not pay any dividends.)
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This solution is comprised of a detailed explanation to compare and contrast the characteristics of the securities of the money market with those of the capital market, compare and contrast common stock from preferred stock, and answer what are the important characteristics of each from the INVESTORS' perspective and why would an investor purchase one or the other.
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a) Compare and contrast the characteristics of the securities of the money market with those of the capital market.
Money market securities are short-term debt securities (maturity dates of 12 months or less) that are traded on the secondary, or money market. The extensive variety of securities traded in the money market includes those issued by the U.S. Government, government agencies, banks, and corporations. Money market securities and related investment instruments include Commercial Paper, Negotiable Certificates of Deposit, Federal Funds, and Money Market Funds. The securities of the money market are issued by those who seek for a place where they may borrow money or lend excess funds for short periods of time. The funds may be invested or borrowed for as little as overnight or as long as a year. However, the securities of the capital market is meant for investment or borrowing of money for long term. The capital market includes the stock market and the bond market. For the securities in ...
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