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financial markets are the institutions that are the intermediaries between savers with borrowers.The bond Market.-Bonds are I.O.Us an example of debt finance.-Bonds can be short terms, such as a few months, or long term years before maturity.-Bonds with a higher credit risk earn more interest.-Junk bonds are very high risk.The Stock Market.-Stock represents ownership in a firm.-Equity finance is the sales of stock to raise to raise money.-The stock exchange is the secondhand market for shares (the business receives no money itself when stocks exchange hands).-The price of shares is determined by supply and demand.-The stock index is computed as the average of a group of share prices.
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