Financial Markets and Institutions Assume that you recently graduated with a degree in reported to work as an investment adviser at the brokerage firm of Sm and have just first assignment is to 2-1 finance yth Barry & Co. Your splain the nature of the U. S. financial markets to Michelle Varga, a professional tennis pl the United States from mone Mexico. Varga is a highly ranked tennis player who expects to invest substantial amounts o rough S financial system to Varga myth Barry. She is very bright; therefore, she would like to understand in general terms what will r money. Your boss has developed the following questions that you must use to explain the U. S. appen to he What are the three primary ways in which capital is transferred between savers and borrowers? Describe each one. What is a market? Differentiate between the following types of markets: physical asset markets versus financial kets versus futures markets, money markets versus capital markets, primary markets b. rsus secondary markets, and public markets versus private markets c. W hy are fina Wha Explain. ncial markets essential for a healthy economy and economic growth? t are derivatives? How can derivatives be used to reduce risk? Can derivatives be used to increase risk? describe each of the following financial institutions: investment banks, commercial banks, financial equity e. Briefly services corporations, pension funds, mutual funds, exchange traded funds, hedge funds, and private companues. f. What are the two leading stock markets? Describe the two basic types of stock markets. pple Computer decided to issue additional common stock and Varga purchased 100 shares of this stock frorm Smyth Barry, the underwriter, would this make a difference if Varga purchased previously outstanding Apple stock in the dealer market? Explain. What is an initial public offering (IPO)? Wha transaction be a primary or a secondary market transaction? Would it h. i. t does it mean for a market to be efficient? Explain why some stock prices may be more efficient than others After your consultation with Michelle, she wants to discuss these two possible stock purchases 1. While in the waiting room of your office, she overheard an analyst on a financial TV network i. say that a particular medical research company just received FDA approval for one of its products. On the ba y shares of that company's stock. Assuming the stock market is hot" information, Michelle wants to buy man highly efficient, what advice would you give her? She has read a number of newspaper articles about a huge IPO being carried out by a leading techno company. She wants to purchase as many shares in shares in the open market immediately after the issue 2. logy the IPO as possible and would even be willing to buy the . What advice do you have for her? k. How does behavioral finance explain the real world inconsistencies of the efficient markets hypothesis (EMH)?