The Role of Capital Market Intermediaries in The Dot- Com Crash of 2000 1. What is the intended role of each of the institutions and intermediaries discussed in thecase for the effective functioning of capital markets? The institutions and intermediates roles are: a)Venture capitalists: VC provides capital for companies in their early stages of developmentand screen good business ideas and entrepreneurial teams from bad ones. It employs savvy business people who worked closely with their
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AND FINANCIAL MARKETS Peter N. Ireland Department of Economics Boston College irelandp@bc.edu http://www2.bc.edu/~irelandp/ec261.html Chapter 2: An Overview of the Financial System 1. Function of Financial Markets and Financial Intermediaries 2. Structure of Financial Markets Debt and Equity Markets Primary and Secondary Markets Exchanges and Over-the-Counter Markets Money and Capital Markets 3. Financial Instruments Money Market Instruments Capital Market Instruments 4. Role of Financial Intermediaries
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AND FINANCIAL MARKETS Peter N. Ireland Department of Economics Boston College irelandp@bc.edu http://www2.bc.edu/~irelandp/ec261.html Chapter 2: An Overview of the Financial System 1. Function of Financial Markets and Financial Intermediaries 2. Structure of Financial Markets Debt and Equity Markets Primary and Secondary Markets Exchanges and Over-the-Counter Markets Money and Capital Markets 3. Financial Instruments Money Market Instruments Capital Market Instruments 4. Role of Financial
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funds to productive uses. In line with the assumption that banking sector plays an important role in financing the investment projects, successive governments in Nigeria have carried out reforms and institutional innovations in the banking sector. The overall intention of these reforms has been to ensure financial stability so as to influence the growth of the economy and also enhance banks to play a critical role of financial intermediation in Nigeria. However, despite the fact that Nigerian banks have
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Explain the main reasons why financial markets and financial intermediaries exist. Why are banks special? A bank is a financial intermediary that offers loans and deposits, and payment services. In the past decade the banks have become a very important part of the economy. Banks are financial intermediaries, financial intermediaries and financial markets main role is to provide a system by which funds are transferred and allocated to their most productive opportunities. Banks need money and they
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Week 2: Introduction to the Financial System 1.1 Functions of a financial market * Markets are the process that facilitates the exchange of things of values. These things of value are often categorised as real assets, such as a house or a car, and financial assets, such as a loan to buy a house or car. These could take place in a non-formal market place, non-market exchanges can be very time consuming. * It brings opposite parties together. If not, those with needs must go everywhere
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CASE STUDY: THE ROLE OF CAPITAL MARKET INTERMEDIARIES IN THE DOT-COM CRASH OF 2000 Question 1 Venture Capitalists: The intended role should be to fund effectively picked out unlisted growth companies with promising business ideas and talented value driven management teams from those companies that do not reflect these characteristics. As VC’s typically encounter high risk upon investing, they also demand a high return that often comes in the form of a sell out of shares after an IPO. Putting
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Study 1. What is the intended role of each of the institutions and intermediaries discussed in the case for the effective functioning of capital markets? The intended role of each of the institutions and intermediaries are shown in Exhibit 10, with the idea that the overall structure and individual roles are working as a whole to facilitate the capital flow from the investors to the companies. 2. Are their incentives aligned properly with their intended role? Whose incentives are most misaligned
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Objective: To discuss the role of capital market intermediaries in the dot-com of 2000 and to check whether their incentives were properly aligned with their intended roles. Observation: This case mainly describes the dot-com bubble and discusses the underlying causes of the bubble burst. It was primarily caused due to the speculation by intermediaries such as investors, accountants, lawyers, regulatory bodies, investment banks, venture capitalists, and money management firms of the value of the
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the intended role of each of the institutions and intermediaries discussed in the case for the effective functioning of capital markets? Venture Capitalists VCs have several intended roles in order for capital markets to function effectively. First of all, VCs provide needed financing for startup companies and, also, build strong platform for further financing. Since it is difficult for new companies to raise capital in public markets, VCs are necessary intermediaries. Another role of VCs is to
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