Securtities Analysis Midterm

Running Head : MARKET ANALYSIS

Market Analysis

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Subject

Market Analysis

Market

Market is defined as a group of consumers or organizations interested in a product

Characteristics of a Good Market

A good market is the one that is lucrative , large enough and knows income opportunity . Moreover , a good market is concentrated geographically and constitutes of people that one can easily approach It is also comprised of people with whom one can be compatible with (MassMutual Financial Group , n .d

Market Liquidity

Market

liquidity refers to the difference between the transaction price and the fundamental value (Brunnermeier Pedersen , 2008 . When determining whether a market is liquid , there are factors related to it such as the price impact of a trade . A liquid market is where trades can be carried out with minimum effect on price . Market liquidity is also seen as an essential factor in market efficiency and may affect price discovery function (Muranaga Shimizu , n .d ,

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Primary and Secondary Market for Securities

The primary market is a means for the sale of new securities , a function that is useful for issuers of securities and governments and corporations alike (ShareGyan , 2007 . At this level , there are a lot of transactions regarding negotiating deals with large institutional investors and investment bankers to place the bonds in the market bought by a corporation (About .com , 2009

A secondary market , on the contrary , is simply the process of buying and selling bonds (About .com , 2009 . It has an important role...