FNCE 4070 29 August 2012. Function of Financial Markets.

FNCE 4070

29 August 2012

Function of Financial Markets

Indirect Finance Example

• Vanguard Short-Term Treasury Fund (VFISX)– Profile - The investment seeks current income. The

fund invests at least 80% of assets in U.S. Treasury bills, notes, bonds, and other guaranteed U.S. government obligations. It maintains an average weighted portfolio maturity of between one to four years.

– Net Assets $6.67B– Minimum Investment $3,000.00

Structure of Financial Markets

• Primary Market– New security issues sold to initial buyers– Typically involves an investment bank who

underwrites the offering• Secondary Market– Securities previously issued are bought

and sold– Examples include the NYSE and Nasdaq– Involves both brokers and dealers