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December 28, 2014

Homework Help: finance (capital to corporations)

Posted by Jason on Friday, July 25, 2008 at 2:33pm.

the financial markets allocate capital to corporations by

A. reflecting expectations of the market participants in the prices of the corporation's securities
B. requiring higher returns from companies with lower risk than their competitors
C. rewarding companies with expected high returns with lower relative stock prices
D. relying on the opinion of investment bankers

finalcial markets bring companies with surplus money together with companies that need money. Fincial banking houses buy securities from companies that need money and the resell the securities to company with surplus money in a fincial market. I don't think the market allocates capital to corporations....I think the banking houses buy corporate securities.....

I like A as the best answer....

reflecting expectations of the market participants in the prices of the corporation's securities

Is this correct???

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