Explain Why Primary Markets Are the Key to the Wealth

question 49

Essay

Explain why primary markets are the key to the wealth creation process.

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Definitions:

Par Value

A nominal or face value assigned to a share of stock by the company's charter, not necessarily reflecting its actual market value.

Government Of Canada

The federal administration and institutions of Canada, responsible for national policy and governance.

Inflation Premium (IP)

The premium added to the real risk-free rate of interest to compensate for the expected loss of purchasing power. The inflation premium is the average rate of inflation expected over the life of the security.

Default Risk Premium (DRP)

The additional yield that investors demand to compensate for the risk of default by the issuer of a bond beyond the risk-free rate.