Question

 

Terms:

Reconveyance IPO

       Primary market                               Exchange

         Financial intermediary                     Specialist

         Institutional Investor                      Market maker

         Use of Funds                                   Source of Funds

         Real rate                                         Treasury’s

Answer 1

Reconveyance IPO

There is no such term in finance as Reconveyance IPO.

But rather for the sake of explaining the terms , it can be explained separately.

Reconveyance

A mortgage holder issues a deed of reconveyance to indicate that the borrower has been released from the mortgage debt. The deed transfers the property title from the lender, also called the beneficiary, to the borrower. This document is most commonly used when a mortgage has been paid in full.

IPO

Initial public offering(IPO) is the process by which a private company can go public by sale of its stocks to general public. It could be a new, young company or an old company which decides to be listed on an exchange and hence goes public.Companies can raise equity capital with the help of an IPO by issuing new shares to the public or the existing shareholders can sell their shares to the public without raising any fresh capital.

Primary Market:

Primary Market is the market where sahres are issued for first time.Hence, it is also known as new issue market.The securities can be issued through direct sales by companies,through brokers,through underwriters or intermediary financial institutions.

The participants in the primary market can be listed as follows:-

a) Portfolio manager b) Merchant banker c) Registrar d) Trustee e) Investment banks f) Depositories g) Custodian

Funds can be raised in primary market through several methods such as:-

a) Public Issue b) Right issue c) Bonus issue d) Private Placement e) Preferential shares f) Qualified institutional placement g) Brought out deals h) Depository receipts

Financial Intermediaries

Financial Intermediaries are the organizations which help in the transfer or channeling of funds from those who have surplus funds to those who are in need of it. They act as a middleman in connecting the surplus parties to the deficit ones.

Institutional Investor

An institutional investor is a company or organization that invests money on behalf of other people. Mutual funds, pensions, and insurance companies are examples.

Uses of Fund

The money needed for various purposes for business startup, including. beginning quantities of supplies, equipment, and furniture needed the purchase of building and land or costs of deposits for rent, and other startup costs.

Real rate

A real interest rate is an interest rate that has been adjusted to remove the effects of inflation to reflect the real cost of funds to the borrower and the real yield to the lender or to an investor. The real interest rate reflects the rate of time-preference for current goods over future goods.

The effective interest rate is calculated through a simple formula: r = (1 + i/n)^n - 1. In this formula, r represents the effective interest rate, i represents the stated interest rate, and n represents the number of compounding periods per year.

Exchange

An exchange is a marketplace where securities, commodities, derivatives and other financial instruments are traded. The core function of an exchange is to ensure fair and orderly trading and the efficient dissemination of price information for any securities trading on that exchange.

Specialist

A specialist serves as a market maker on its assigned securities by buying and selling them to ensure liquidity in the market.

Market Makers

Market Makers are member firms appointed by the stock exchange to inject liquidity and trade volume into stocks. Each Market Maker displays buy and sell quotations for a guaranteed number of shares.

Source of Funds

The sources of funds are primarily deposits, borrowed capital and shareholders' funds while the primary uses are loans and investments, defensive assets and required reserves.

Treasury’s

A treasury is either

· A government department related to finance and taxation, a finance ministry.

· A place or location where treasure, such as currency or precious items are kept. These can be state or royal property, church valuables or in private ownership.