Differentiate between common stock and preferred stock

Course:- Finance Basics
Reference No.:- EM13884349

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Q1. What is secondary Market? Discuss four types of Secondary market.

Q2. Differentiate between Common Stock and preferred stock.

Q3. What do you mean by capital budgeting. Also discuss its importance.

Q4. Project X has following cash flows,

CF₀ CF₁CF₂CF₃

-$5000 $1000 $2000 $3000

If the firm's cost of capital is 12%, using NPV technique state whether the project should be accepted or rejected.

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A secondary market is a financial market where different securities are traded on a well-organized and highly regulated manner so as protect the interest of the investors. Securities traded include both equity as well as debt securities. It is a market where investor purchase securities from other investor rather than from acquiring directly from any company. For instanceNew York stock exchange (NYSE), American Stock Exchange (AMEX) and Over the Counter Market (OTC) are examples of secondary market.In this market bulk of transaction takes place each day and price of the securities is solely determined by the forces of demand and supply.(investopedia, Secondary Market, n.d.)

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