Raising Capital in the Global Economy The purpose of this paper is to show the current problems of raising capital in the global economy on the by the example of stock market and stock exchange. A stock market is a market for the trading of company stock. They both are listed on a stock exchange. stock exchange (or share market, bourse) is a corporation which provides conditions for stock brokers and traders, to trade company stocks and other securities. The main purpose of the stock exchange is to provide companies with the conditions to raise capital for expansion through selling shares to the investing public. Raising money in U.S.
stock markets is more difficult than in the rest of the world. AMEX’s core business has shifted over the years from stocks to options, although it continues to trade small to mid-size stocks. An effort in the mid-1990s to initiate an Emerging Company Marketplace ended in failure, as the reduced listing standards (beyond the existing lenient AMEX standards) caused penny stock promoters to move their scams to a national exchange. (Wikipedia, 2006) The tension between the NASD and AMEX members also brings troubles in US stock exchange. Also the lack of well thought-out legislative, regulatory, and supervisory infrastructure that functions properly, smoothly, and honestly add financial imbalance in stock exchange. However in spite of all difficulties related with US stock exchange it is generally worthwhile for a non-U.S.
The Essay on Stock Exchange Market Shares Buy Stockbroker
A stock exchange is a place where you can buy and sell shares. We call people who buy or sell small numbers of shares small investors. Organizations, who buy or sell large numbers of shares, are institutional investors. A stock exchange is the place where companies can raise money to expand their businesses. Companies raise this money by selling shares to investors. At the same time the stock ...
company to get listed on a U.S. exchange. More and more foreign companies are finding it worthwhile to have their shares listed on American stock exchanges. This brings access to more capital, as well as increased prestige. However, they are many hurdles and difficulties involved in getting a foreign company listed on an American stock exchange. The United States is the world’s best customer.
It buys far more from foreign countries than it sells to them, resulting in a sizable trade deficit. It also spends more on public programs than it collects in tax revenues. And to pay for all these outlays, the U.S. must attract mountains of foreign capital each year, which essentially amounts to borrowing from foreign governments and investors. This is commonly referred to as the current accounts deficit — which was running at US$665 billion last year. (Is America going broke?, March 02, 2005) Stock exchange is the best way for foreign companies to get rid of their goods on American market.
For example rising share prices is associated with increasing investment and vice versa. There are a number of issues necessary for a non-US company in raising capital by getting listed on a US exchange. This set of conditions (listing requirements) often includes minimum number of shares outstanding, minimum market capitalization, and minimum annual income. For example to be listed on the New York Stock Exchange (NYSE) a company must have issued at least a million shares of stock worth $100 million and must have earned more than $10 million over the last three years. But to be listed in US stock exchange list is very profitable in spite of all extra costs associated with it. Companies from developing countries, in which institutions are often weak or underdeveloped, gain credibility with both U.S. and home-country investors when the investors know that those companies must comply with U.S. laws, Leuz said.
The Essay on International Foreign Exchange Market
Foreign currency deposits are held by different countries in their national banks. They are the assets of the government which are held in hard currencies such as sterling, euro, dollar and yen. These currencies are used to protect the country against economic crisis and depreciation of currency (Timothy, 2009, p230). Everyday exchange rates are important because they determine how much money is ...
It sends a pretty strong signal to the market: ‘We are trying to do the right thing,'” he said. Leuz said that enhanced credibility helps such companies to raise capital both in the United States and home-country markets. (Foreign Firms Gain from U.S. Corporate Governance, Expert Says, 19 July, 2006) What about the difference in risk and return in different stock markets in the US and around the world I want to say that according to Keim and Gyourko the risk/return characteristics of US market indicates that returns from the real estate strategy are related to the actual performance of the real estate market. The same patterns can be found in world markets. But the weak correlation of the developed and emerging foreign markets results in differences between US and world stock exchange. The globalization of economy should, in future, change current situation for better.
Bibliography: Steve Maich, (March 02, 2005), Is America going broke?. Retrieved September 14, 2006 from http://www.macleans.ca/topstories/world/article.js p?content=20050307_101541_101541 Andrzej Zwaniecki, (19 July, 2006), Washington File Staff Writer. Foreign Firms Gain from U.S. Corporate Governance, Expert Says. Retrieved September 14, 2006 from http://www.usembassy.org.uk/econ389.html Wikipedia, the free encyclopedia. Retrieved September 14, 2006 from http://en.wikipedia.org/wiki/Stock_markets.
