What is the primary difference between equity capital markets (ECM) and debt capital markets (DCM)?
- AECM: stock offerings; DCM: debt offerings✓ Correct answer
- BECM is for domestic offerings and DCM is for international offerings
- CECM involves private placements and DCM involves public offerings
- DECM is regulated by the SEC and DCM is regulated by FINRA
Why A — ECM: stock offerings; DCM: debt offerings
Equity capital markets (ECM) focuses on the issuance and trading of ownership securities, including common stock, preferred stock, and equity-linked securities such as convertible bonds. Debt capital markets (DCM) focuses on the issuance of debt instruments such as investment-grade bonds, high-yield bonds, loans, and other fixed-income securities. Both ECM and DCM transactions can be domestic or international, public or private, and are regulated by both the SEC and FINRA. Investment banks typically have separate ECM and DCM teams given the different skill sets and investor bases involved.
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