3-1 What is a financial market? What is the role of a financial market? (al least 60 words)

3-2 What would happen to the standard of living in the United States if people lost

faith in our financial markets? Why? (at least 60 words)

3-3 How does a cost-efficient capital market help to reduce the prices of goods and

services? (al least 60 words)

3-5 How do you think each of the following would affect a companys ability to

attract new capital and the flotation (issuing) costs involved in doing so?

a. The decision to list a companys stock; the stock now trades in the

over-the-counter market

b. The decision of a privately held company to go public

c. An increasing importance of institutions in the stock and bond markets

d. The continuing trend toward financial conglomerates as opposed to

stand-alone investment banking houses

e. An increase in the number of shelf registrations

3-8 Both physical stock exchanges and the OTC market are markets for trading

stocks. Why do you think companies want to be listed on physical exchanges

rather than stay OTC?

3-9 Microsoft and Intel qualify to be listed on the New York Stock Exchange,

but both have chosen to be traded on the NASDAQ market. Can you think

of reasons the companies would choose to be traded on the NASDAQ? (Hint:

Both companies deal with products that relate to electronic or computer media.) at least 70 words,

3-10 What types of companies enter the markets for initial public offerings? Why do companies choose to go public? Why not stay private?(at least 60 words)