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    Means of Financing: Trading

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    Maika J. Pudadera
    There are three main methods for financing a company: equity financing through the sale of stock, debt financing such as issuing bonds, and trade financing which provides working capital. Stocks can generally be transferred between shareholders and other parties according to laws of the jurisdiction. Stock exchanges provide marketplaces for trading shares and derivatives, where stocks are usually traded by brokers representing shareholders. Companies may also trade their shares over-the-counter if they do not meet exchange requirements.

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    Means of Financing: Trading

    Uploaded by

    Maika J. Pudadera
    16 views1 page
    There are three main methods for financing a company: equity financing through the sale of stock, debt financing such as issuing bonds, and trade financing which provides working capital. Stocks can generally be transferred between shareholders and other parties according to laws of the jurisdiction. Stock exchanges provide marketplaces for trading shares and derivatives, where stocks are usually traded by brokers representing shareholders. Companies may also trade their shares over-the-counter if they do not meet exchange requirements.

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    There are three main methods for financing a company: equity financing through the sale of stock, debt financing such as issuing bonds, and trade financing which provides working capital. Stocks can generally be transferred between shareholders and other parties according to laws of the jurisdiction. Stock exchanges provide marketplaces for trading shares and derivatives, where stocks are usually traded by brokers representing shareholders. Companies may also trade their shares over-the-counter if they do not meet exchange requirements.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    16 views1 page

    Means of Financing: Trading

    Uploaded by

    Maika J. Pudadera
    There are three main methods for financing a company: equity financing through the sale of stock, debt financing such as issuing bonds, and trade financing which provides working capital. Stocks can generally be transferred between shareholders and other parties according to laws of the jurisdiction. Stock exchanges provide marketplaces for trading shares and derivatives, where stocks are usually traded by brokers representing shareholders. Companies may also trade their shares over-the-counter if they do not meet exchange requirements.

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    Means of financing[edit]

    Financing a company through the sale of stock in a company is known as equity financing.


    Alternatively, debt financing (for example issuing bonds) can be done to avoid giving up shares of
    ownership of the company. Unofficial financing known as trade financing usually provides the major
    part of a company's working capital (day-to-day operational needs).

    Trading[edit]
    Main article: Stock trader

    A stockbroker using multiple screens to stay up to date on trading


    In general, the shares of a company may be transferred from shareholders to other parties by sale or
    other mechanisms, unless prohibited. Most jurisdictions have established laws and regulations
    governing such transfers, particularly if the issuer is a publicly traded entity.
    The desire of stockholders to trade their shares has led to the establishment of stock exchanges,
    organizations which provide marketplaces for trading shares and other derivatives and financial
    products. Today, stock traders are usually represented by a stockbroker who buys and sells shares
    of a wide range of companies on such exchanges. A company may list its shares on an exchange by
    meeting and maintaining the listing requirements of a particular stock exchange. In the United
    States, through the intermarket trading system, stocks listed on one exchange can often also be
    traded on other participating exchanges, including electronic communication networks (ECNs), such
    as Archipelago or Instinet.[22]
    Many large non-U.S companies choose to list on a U.S. exchange as well as an exchange in their
    home country in order to broaden their investor base. These companies must maintain a block of
    shares at a bank in the US, typically a certain percentage of their capital. On this basis, the holding
    bank establishes American depositary shares and issues an American depositary receipt (ADR) for
    each share a trader acquires. Likewise, many large U.S. companies list their shares at foreign
    exchanges to raise capital abroad.
    Small companies that do not qualify and cannot meet the listing requirements of the major
    exchanges may be traded over-the-counter (OTC) by an off-exchange mechanism in which trading
    occurs directly between parties. The major OTC markets in the United States are the electronic
    quotation systems OTC Bulletin Board (OTCBB) and OTC Markets Group (formerly known as Pink
    OTC Markets Inc.)[23] where individual retail investors are also represented by a brokerage firm and
    the quotation service's requirements for a company to be listed are minimal. Shares of companies in
    bankruptcy proceedings are usually listed by these quotation services after the stock is delisted from
    an exchange.

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