A capital market is a financial market in which long-term debt or equity-backed securities are bought and sold. Capital markets channel the wealth of savers to those who can put it to long-term productive use, such as companies or governments making long-term investments. Financial regulators like the Bank of England and the U. S. Securities and Exchange Commission oversee capital markets to protect investors against fraud, among other duties. Modern capital markets are invariably hosted on computer-based electronic trading platforms; as an example, in the United States, any American citizen with an internet connection can create an account with TreasuryDirect and use it to buy bonds in the primary market, though sales to individuals form only a tiny fraction of the total volume of bonds sold. Various private companies provide browser-based platforms that allow individuals to buy shares and sometimes bonds in the secondary markets. There are many thousands of such systems, most serving only small parts of the overall capital markets.
Entities hosting the systems include stock exchanges, investment banks, government departments. Physically, the systems are hosted all over the world, though they tend to be concentrated in financial centres like London, New York, Hong Kong. A capital market can be either a secondary market. In primary market, new stock or bond issues are sold to investors via a mechanism known as underwriting; the main entities seeking to raise long-term funds on the primary capital markets are governments and business enterprises. Governments issue only bonds, whereas companies issue both equity and bonds; the main entities purchasing the bonds or stock include pension funds, hedge funds, sovereign wealth funds, less wealthy individuals and investment banks trading on their own behalf. In the secondary market, existing securities are sold and bought among investors or traders on an exchange, over-the-counter, or elsewhere; the existence of secondary markets increases the willingness of investors in primary markets, as they know they are to be able to swiftly cash out their investments if the need arises.
A second important division falls between the bond markets. The money markets are used for the raising of short-term finance, sometimes for loans that are expected to be paid back as early as overnight. In contrast, the "capital markets" are used for the raising of long-term finance, such as the purchase of shares/equities, or for loans that are not expected to be paid back for at least a year. Funds borrowed from money markets are used for general operating expenses, to provide liquid assets for brief periods. For example, a company may have inbound payments from customers that have not yet cleared, but need immediate cash to pay its employees; when a company borrows from the primary capital markets the purpose is to invest in additional physical capital goods, which will be used to help increase its income. It can take many months or years before the investment generates sufficient return to pay back its cost, hence the finance is long term. Together, money markets and capital markets form the financial markets, as the term is narrowly understood.
The capital market is concerned with long-term finance. In the widest sense, it consists of a series of channels through which the savings of the community are made available for industrial and commercial enterprises and public authorities. Regular bank lending is not classed as a capital market transaction when loans are extended for a period longer than a year. First, regular bank loans are not securitized. Second, lending from banks is more regulated than capital market lending. Third, bank depositors tend to be more risk-averse than capital market investors; these three differences all act to limit institutional lending as a source of finance. Two additional differences, this time favoring lending by banks, are that banks are more accessible for small and medium-sized companies, that they have the ability to create money as they lend. In the 20th century, most company finance apart from share issues was raised by bank loans, but since about 1980 there has been an ongoing trend for disintermediation, where large and creditworthy companies have found they have to pay out less interest if they borrow directly from capital markets rather than from banks.
The tendency for companies to borrow from capital markets instead of banks has been strong in the United States. According to the Financial Times, capital markets overtook bank lending as the leading source of long-term finance in 2009, which reflects the risk aversion and bank regulation in the wake of the 2008 financial crisis. Compared to in the United States, companies in the European Union have a greater reliance on bank lending for funding. Efforts to enable companies to raise more funding through capital markets are being coordinated through the EU's Capital Markets Union initiative; when a government wants to raise long-term finance it will sell bonds in the capital markets. In the 20th and early 21st centuries, many governments would use investment banks to organize the sale of their bonds; the leading bank would underwrite the bonds, would head up a syndicate of brokers, some of whom might
A mortgage loan or mortgage is used either by purchasers of real property to raise funds to buy real estate, or alternatively by existing property owners to raise funds for any purpose, while putting a lien on the property being mortgaged. The loan is "secured" on the borrower's property through a process known as mortgage origination; this means that a legal mechanism is put into place which allows the lender to take possession and sell the secured property to pay off the loan in the event the borrower defaults on the loan or otherwise fails to abide by its terms. The word mortgage is derived from a Law French term used in Britain in the Middle Ages meaning "death pledge" and refers to the pledge ending when either the obligation is fulfilled or the property is taken through foreclosure. A mortgage can be described as "a borrower giving consideration in the form of a collateral for a benefit". Mortgage borrowers can be individuals mortgaging their home or they can be businesses mortgaging commercial property.
The lender will be a financial institution, such as a bank, credit union or building society, depending on the country concerned, the loan arrangements can be made either directly or indirectly through intermediaries. Features of mortgage loans such as the size of the loan, maturity of the loan, interest rate, method of paying off the loan, other characteristics can vary considerably; the lender's rights over the secured property take priority over the borrower's other creditors, which means that if the borrower becomes bankrupt or insolvent, the other creditors will only be repaid the debts owed to them from a sale of the secured property if the mortgage lender is repaid in full first. In many jurisdictions, it is normal for home purchases to be funded by a mortgage loan. Few individuals have enough savings or liquid funds to enable them to purchase property outright. In countries where the demand for home ownership is highest, strong domestic markets for mortgages have developed. Mortgages can either be funded through the banking sector or through the capital markets through a process called "securitization", which converts pools of mortgages into fungible bonds that can be sold to investors in small denominations.
According to Anglo-American property law, a mortgage occurs when an owner pledges his or her interest as security or collateral for a loan. Therefore, a mortgage is an encumbrance on the right to the property just as an easement would be, but because most mortgages occur as a condition for new loan money, the word mortgage has become the generic term for a loan secured by such real property; as with other types of loans, mortgages have an interest rate and are scheduled to amortize over a set period of time 30 years. All types of real property can be, are, secured with a mortgage and bear an interest rate, supposed to reflect the lender's risk. Mortgage lending is the primary mechanism used in many countries to finance private ownership of residential and commercial property. Although the terminology and precise forms will differ from country to country, the basic components tend to be similar: Property: the physical residence being financed; the exact form of ownership will vary from country to country, may restrict the types of lending that are possible.
Mortgage: the security interest of the lender in the property, which may entail restrictions on the use or disposal of the property. Restrictions may include requirements to purchase home insurance and mortgage insurance, or pay off outstanding debt before selling the property. Borrower: the person borrowing who either has or is creating an ownership interest in the property. Lender: any lender, but a bank or other financial institution. Principal: the original size of the loan, which may or may not include certain other costs. Interest: a financial charge for use of the lender's money. Foreclosure or repossession: the possibility that the lender has to foreclose, repossess or seize the property under certain circumstances is essential to a mortgage loan. Completion: legal completion of the mortgage deed, hence the start of the mortgage. Redemption: final repayment of the amount outstanding, which may be a "natural redemption" at the end of the scheduled term or a lump sum redemption when the borrower decides to sell the property.
A closed mortgage account is said to be "redeemed". Many other specific characteristics are common to many markets, but the above are the essential features. Governments regulate many aspects of mortgage lending, either directly or indirectly, through state intervention. Other aspects that define a specific mortgage market may be regional, historical, or driven by specific characteristics of the legal or financial system. Mortgage loans are gen
The United States of America known as the United States or America, is a country composed of 50 states, a federal district, five major self-governing territories, various possessions. At 3.8 million square miles, the United States is the world's third or fourth largest country by total area and is smaller than the entire continent of Europe's 3.9 million square miles. With a population of over 327 million people, the U. S. is the third most populous country. The capital is Washington, D. C. and the largest city by population is New York City. Forty-eight states and the capital's federal district are contiguous in North America between Canada and Mexico; the State of Alaska is in the northwest corner of North America, bordered by Canada to the east and across the Bering Strait from Russia to the west. The State of Hawaii is an archipelago in the mid-Pacific Ocean; the U. S. territories are scattered about the Pacific Ocean and the Caribbean Sea, stretching across nine official time zones. The diverse geography and wildlife of the United States make it one of the world's 17 megadiverse countries.
Paleo-Indians migrated from Siberia to the North American mainland at least 12,000 years ago. European colonization began in the 16th century; the United States emerged from the thirteen British colonies established along the East Coast. Numerous disputes between Great Britain and the colonies following the French and Indian War led to the American Revolution, which began in 1775, the subsequent Declaration of Independence in 1776; the war ended in 1783 with the United States becoming the first country to gain independence from a European power. The current constitution was adopted in 1788, with the first ten amendments, collectively named the Bill of Rights, being ratified in 1791 to guarantee many fundamental civil liberties; the United States embarked on a vigorous expansion across North America throughout the 19th century, acquiring new territories, displacing Native American tribes, admitting new states until it spanned the continent by 1848. During the second half of the 19th century, the Civil War led to the abolition of slavery.
By the end of the century, the United States had extended into the Pacific Ocean, its economy, driven in large part by the Industrial Revolution, began to soar. The Spanish–American War and World War I confirmed the country's status as a global military power; the United States emerged from World War II as a global superpower, the first country to develop nuclear weapons, the only country to use them in warfare, a permanent member of the United Nations Security Council. Sweeping civil rights legislation, notably the Civil Rights Act of 1964, the Voting Rights Act of 1965 and the Fair Housing Act of 1968, outlawed discrimination based on race or color. During the Cold War, the United States and the Soviet Union competed in the Space Race, culminating with the 1969 U. S. Moon landing; the end of the Cold War and the collapse of the Soviet Union in 1991 left the United States as the world's sole superpower. The United States is the world's oldest surviving federation, it is a representative democracy.
The United States is a founding member of the United Nations, World Bank, International Monetary Fund, Organization of American States, other international organizations. The United States is a developed country, with the world's largest economy by nominal GDP and second-largest economy by PPP, accounting for a quarter of global GDP; the U. S. economy is post-industrial, characterized by the dominance of services and knowledge-based activities, although the manufacturing sector remains the second-largest in the world. The United States is the world's largest importer and the second largest exporter of goods, by value. Although its population is only 4.3% of the world total, the U. S. holds 31% of the total wealth in the world, the largest share of global wealth concentrated in a single country. Despite wide income and wealth disparities, the United States continues to rank high in measures of socioeconomic performance, including average wage, human development, per capita GDP, worker productivity.
The United States is the foremost military power in the world, making up a third of global military spending, is a leading political and scientific force internationally. In 1507, the German cartographer Martin Waldseemüller produced a world map on which he named the lands of the Western Hemisphere America in honor of the Italian explorer and cartographer Amerigo Vespucci; the first documentary evidence of the phrase "United States of America" is from a letter dated January 2, 1776, written by Stephen Moylan, Esq. to George Washington's aide-de-camp and Muster-Master General of the Continental Army, Lt. Col. Joseph Reed. Moylan expressed his wish to go "with full and ample powers from the United States of America to Spain" to seek assistance in the revolutionary war effort; the first known publication of the phrase "United States of America" was in an anonymous essay in The Virginia Gazette newspaper in Williamsburg, Virginia, on April 6, 1776. The second draft of the Articles of Confederation, prepared by John Dickinson and completed by June 17, 1776, at the latest, declared "The name of this Confederation shall be the'United States of America'".
The final version of the Articles sent to the states for ratification in late 1777 contains the sentence "The Stile of this Confederacy shall be'The United States of America'". In June 1776, Thomas Jefferson wrote the phrase "UNITED STATES OF AMERICA" in all capitalized letters in the headline of his "original Rough draught" of the Declaration of Independence; this draft of the document did not surface unti
Richmond is the capital of the Commonwealth of Virginia in the United States. It is the center of the Greater Richmond Region. Richmond was incorporated in 1742 and has been an independent city since 1871; as of the 2010 census, the city's population was 204,214. The Richmond Metropolitan Area has a population of 1,260,029, the third-most populous metro in the state. Richmond is located at the fall line of the James River, 44 miles west of Williamsburg, 66 miles east of Charlottesville, 100 miles east of Lynchburg and 90 miles south of Washington, D. C. Surrounded by Henrico and Chesterfield counties, the city is located at the intersections of Interstate 95 and Interstate 64, encircled by Interstate 295, Virginia State Route 150 and Virginia State Route 288. Major suburbs include Midlothian to the southwest, Chesterfield to the south, Varina to the southeast, Sandston to the east, Glen Allen to the north and west, Short Pump to the west and Mechanicsville to the northeast; the site of Richmond had been an important village of the Powhatan Confederacy, was settled by English colonists from Jamestown in 1609, in 1610–1611.
The present city of Richmond was founded in 1737. It became Dominion of Virginia in 1780, replacing Williamsburg. During the Revolutionary War period, several notable events occurred in the city, including Patrick Henry's "Give me liberty or give me death" speech in 1775 at St. John's Church, the passage of the Virginia Statute for Religious Freedom written by Thomas Jefferson. During the American Civil War, Richmond served as the second and permanent capital of the Confederate States of America; the city entered the 20th century with one of the world's first successful electric streetcar systems. The Jackson Ward neighborhood is a national hub of African-American culture. Richmond's economy is driven by law and government, with federal and local governmental agencies, as well as notable legal and banking firms, located in the downtown area; the city is home to both the United States Court of Appeals for the Fourth Circuit, one of 13 United States courts of appeals, the Federal Reserve Bank of Richmond, one of 12 Federal Reserve Banks.
Dominion Energy and WestRock, Fortune 500 companies, are headquartered in the city, with others in the metropolitan area. After the first permanent English-speaking settlement was established in April 1607, at Jamestown, Captain Christopher Newport led explorers northwest up the James River, to an area, inhabited by Powhatan Native Americans; the earliest European settlement in the Central Virginia area was in 1611 at Henricus, where the Falling Creek empties into the James River. In 1619, early Virginia Company settlers struggling to establish viable moneymaking industries established the Falling Creek Ironworks. After decades of territorial conflicts with native tribes, the Falls of the James became more to white settlement in the late 1600s and early 1700s. In 1737, planter William Byrd II commissioned Major William Mayo to lay out the original town grid. Byrd named the city "Richmond" after the English town of Richmond near London, because the view of the James River was strikingly similar to the view of the River Thames from Richmond Hill in England, where he had spent time during his youth.
The settlement was laid out in April 1737, was incorporated as a town in 1742. In 1775, Patrick Henry delivered his famous "Give me Liberty or Give me Death" speech in St. John's Church in Richmond, crucial for deciding Virginia's participation in the First Continental Congress and setting the course for revolution and independence. On April 18, 1780, the state capital was moved from the colonial capital of Williamsburg to Richmond, to provide a more centralized location for Virginia's increasing westerly population, as well as to isolate the capital from British attack; the latter motive proved to be in vain, in 1781, under the command of Benedict Arnold, Richmond was burned by British troops, causing Governor Thomas Jefferson to flee as the Virginia militia, led by Sampson Mathews, defended the city. Richmond recovered from the war, by 1782 was once again a thriving city. In 1786, the Virginia Statute for Religious Freedom was passed at the temporary capitol in Richmond, providing the basis for the separation of church and state, a key element in the development of the freedom of religion in the United States.
A permanent home for the new government, the Greek Revival style of the Virginia State Capitol building, was designed by Thomas Jefferson with the assistance of Charles-Louis Clérisseau, was completed in 1788. After the American Revolutionary War, Richmond emerged as an important industrial center. To facilitate the transfer of cargo from the flat-bottomed James River bateaux above the fall line to the ocean-faring ships below, an enterprising George Washington helped design the James River and Kanawha Canal from Westham east to Richmond, in the 18th century to bypass Richmond's rapids on the upper James River with the intent of providing a water route across the Appalachian Mountains to the Kanawha River flowing westward into the Ohio eventually to the Mississippi River; the legacy of the canal boatmen is represented by the figure in the center of the city flag. As a result of this and ample access to hydropower due to the falls, Richmond became home to some of the largest manufacturing facilities in the country, including iron works and flour mills, the largest facilities of their kind in The South.
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Virginia the Commonwealth of Virginia, is a state in the Southeastern and Mid-Atlantic regions of the United States located between the Atlantic Coast and the Appalachian Mountains. Virginia is nicknamed the "Old Dominion" due to its status as the first English colonial possession established in mainland North America and "Mother of Presidents" because eight U. S. presidents were born there, more than any other state. The geography and climate of the Commonwealth are shaped by the Blue Ridge Mountains and the Chesapeake Bay, which provide habitat for much of its flora and fauna; the capital of the Commonwealth is Richmond. The Commonwealth's estimated population as of 2018 is over 8.5 million. The area's history begins with several indigenous groups, including the Powhatan. In 1607 the London Company established the Colony of Virginia as the first permanent New World English colony. Slave labor and the land acquired from displaced Native American tribes each played a significant role in the colony's early politics and plantation economy.
Virginia was one of the 13 Colonies in the American Revolution. In the American Civil War, Virginia's Secession Convention resolved to join the Confederacy, Virginia's First Wheeling Convention resolved to remain in the Union. Although the Commonwealth was under one-party rule for nearly a century following Reconstruction, both major national parties are competitive in modern Virginia; the Virginia General Assembly is the oldest continuous law-making body in the New World. The state government was ranked most effective by the Pew Center on the States in both 2005 and 2008, it is unique in how it treats cities and counties manages local roads, prohibits its governors from serving consecutive terms. Virginia's economy has many sectors: agriculture in the Shenandoah Valley. S. Department of Defense and Central Intelligence Agency. Virginia has a total area of 42,774.2 square miles, including 3,180.13 square miles of water, making it the 35th-largest state by area. Virginia is bordered by Maryland and Washington, D.
C. to the north and east. Virginia's boundary with Maryland and Washington, D. C. extends to the low-water mark of the south shore of the Potomac River. The southern border is defined as the 36° 30′ parallel north, though surveyor error led to deviations of as much as three arcminutes; the border with Tennessee was not settled until 1893, when their dispute was brought to the U. S. Supreme Court; the Chesapeake Bay separates the contiguous portion of the Commonwealth from the two-county peninsula of Virginia's Eastern Shore. The bay was formed from the drowned river valleys of the James River. Many of Virginia's rivers flow into the Chesapeake Bay, including the Potomac, Rappahannock and James, which create three peninsulas in the bay; the Tidewater is a coastal plain between the fall line. It includes major estuaries of Chesapeake Bay; the Piedmont is a series of sedimentary and igneous rock-based foothills east of the mountains which were formed in the Mesozoic era. The region, known for its heavy clay soil, includes the Southwest Mountains around Charlottesville.
The Blue Ridge Mountains are a physiographic province of the Appalachian Mountains with the highest points in the state, the tallest being Mount Rogers at 5,729 feet. The Ridge and Valley region includes the Great Appalachian Valley; the region includes Massanutten Mountain. The Cumberland Plateau and the Cumberland Mountains are in the southwest corner of Virginia, south of the Allegheny Plateau. In this region, rivers flow northwest, into the Ohio River basin; the Virginia Seismic Zone has not had a history of regular earthquake activity. Earthquakes are above 4.5 in magnitude, because Virginia is located away from the edges of the North American Plate. The largest earthquake, at an estimated 5.9 magnitude, was in 1897 near Blacksburg. A 5.8 magnitude earthquake struck central Virginia on August 2011, near Mineral. The earthquake was felt as far away as Toronto and Florida. 35 million years ago, a bolide impacted. The resulting Chesapeake Bay impact crater may explain what earthquakes and subsidence the region does experience.
Coal mining takes place in the three mountainous regions at 45 distinct coal beds near Mesozoic basins. Over 64 million tons of other non-fuel resources, such as slate, sand, or gravel, were mined in Virginia in 2018; the state's carbonate rock is filled with more than 4,000 caves, ten of which are open for tourism, including the popular Luray Caverns and Skyline Caverns. The climate of Virginia is humid subtropical and becomes warmer and more humid farther south and east. Seasonal extremes vary from average lows of 26 °F in January to average highs of 86 °F in July; the Atlantic Ocean has a strong effect on southeastern coastal areas of the state. Influenced by the Gulf Stream, coastal weather is subject to hurricanes, most pronouncedly near the mouth of Chesapeake Bay. In spite of its position adjacent to the Atlantic Ocean the coastal areas have a significant continental influence with quite large temperature differences between summ
In finance, a bond is an instrument of indebtedness of the bond issuer to the holders. The most common types of bonds include corporate bonds; the bond is a debt security, under which the issuer owes the holders a debt and is obliged to pay them interest or to repay the principal at a date, termed the maturity date. Interest is payable at fixed intervals; the bond is negotiable, that is, the ownership of the instrument can be transferred in the secondary market. This means that once the transfer agents at the bank medallion stamp the bond, it is liquid on the secondary market, thus a bond is a form of loan or IOU: the holder of the bond is the lender, the issuer of the bond is the borrower, the coupon is the interest. Bonds provide the borrower with external funds to finance long-term investments, or, in the case of government bonds, to finance current expenditure. Certificates of deposit or short-term commercial paper are considered to be money market instruments and not bonds: the main difference is the length of the term of the instrument.
Bonds and stocks are both securities, but the major difference between the two is that stockholders have an equity stake in a company, whereas bondholders have a creditor stake in the company. Being a creditor, bondholders have priority over stockholders; this means they will be repaid in advance of stockholders, but will rank behind secured creditors, in the event of bankruptcy. Another difference is that bonds have a defined term, or maturity, after which the bond is redeemed, whereas stocks remain outstanding indefinitely. An exception is an irredeemable bond, such as a consol, a perpetuity, that is, a bond with no maturity. In English, the word "bond" relates to the etymology of "bind". In the sense "instrument binding one to pay a sum to another", use of the word "bond" dates from at least the 1590s. Bonds are issued by public authorities, credit institutions and supranational institutions in the primary markets; the most common process for issuing bonds is through underwriting. When a bond issue is underwritten, one or more securities firms or banks, forming a syndicate, buy the entire issue of bonds from the issuer and re-sell them to investors.
The security firm takes the risk of being unable to sell on the issue to end investors. Primary issuance is arranged by bookrunners who arrange the bond issue, have direct contact with investors and act as advisers to the bond issuer in terms of timing and price of the bond issue; the bookrunner is listed first among all underwriters participating in the issuance in the tombstone ads used to announce bonds to the public. The bookrunners' willingness to underwrite must be discussed prior to any decision on the terms of the bond issue as there may be limited demand for the bonds. In contrast, government bonds are issued in an auction. In some cases, both members of the public and banks may bid for bonds. In other cases, only market makers may bid for bonds; the overall rate of return on the bond depends on the price paid. The terms of the bond, such as the coupon, are fixed in advance and the price is determined by the market. In the case of an underwritten bond, the underwriters will charge a fee for underwriting.
An alternative process for bond issuance, used for smaller issues and avoids this cost, is the private placement bond. Bonds sold directly to buyers may not be tradeable in the bond market. An alternative practice of issuance was for the borrowing government authority to issue bonds over a period of time at a fixed price, with volumes sold on a particular day dependent on market conditions; this was called a tap bond tap. Nominal, par, or face amount is the amount on which the issuer pays interest, which, most has to be repaid at the end of the term; some structured bonds can have a redemption amount, different from the face amount and can be linked to the performance of particular assets. The issuer has to repay the nominal amount on the maturity date; as long as all due payments have been made, the issuer has no further obligations to the bond holders after the maturity date. The length of time until the maturity date is referred to as the term or tenor or maturity of a bond; the maturity can be any length of time, although debt securities with a term of less than one year are designated money market instruments rather than bonds.
Most bonds have a term of up to 30 years. Some bonds have been issued with terms of 50 years or more, there have been some issues with no maturity date. In the market for United States Treasury securities, there are three categories of bond maturities: short term: maturities between one and five years; the coupon is the interest rate. This rate is fixed throughout the life of the bond, it can vary with a money market index, such as LIBOR, or it can be more exotic. The name "coupon" arose because in the past, paper bond certificates were issued which had coupons attached to them, one for each interest payment. On the due dates the bondholder would hand in the coupon to a bank in exchange for the interest payment. Interest can be paid at different frequencies: semi-annual, i.e. every 6 months, or annual. The yield is the rate of return received from investing in the bond, it refers either to The current yield, or running yield