AN INTRODUCTION TO STOCK EXCHANGE INVESTMENT

b) c) PROVISION OF FINANCE TO COMPANIES. CAPITAL MARKETS HAVE THE FOLLOWING MAIN FUNCTIONS: a) MOBILISATION OF SAVINGS FROM IDLE AGENTS AND TRANSFER TO PRODUCTIVE AGENTS.THE ROLE OF CAPITAL MARKETS  WITHIN THE MARKET ECONOMY. ENCOURAGEMENT OF BROADER OWNERSHIP OF PRODUCTIVE ASSETS. AND PROVISION OF FACILITIES FOR COMPETITIVE TRANSFER (PRICING) OF CAPITAL RESOURCES. d) .

TYPES OF FINANCIAL INVESTMENTS  MONEY & FOREIGN EXCHANGE  CURRENCY AND COINS  DEPOSITS  EQUITIES  COMMON STOCK/ORDINARY SHARES  PREFERRED STOCK  WARRANTS  FIXED INCOME SECURITIES  DEBT OBLIGATIONS  BONDS  MONEY MARKET INSTRUMENTS  DERIVATIVES  OPTIONS. FUTURES AND SWAPS .

DEFINITIONS  FINANCIAL INSTRUMENTS  INSTRUMENTS EVIDENCING A TRANSFER OF FUNDS AMONG INDIVIDUALS AND ORGANISATIONS FOR THE PURPOSE OF ALLOWING THOSE RECEIVING THE FUNDS TO MAKE INVESTMENTS OR INCREASE CONSUMPTION  DERIVATIVES INSTRUMENTS TYPICALLY CREATED FOR THE PURPOSE OF TRANSFERRING RISK  MONEY  A SECURITY IS A FINANCIAL INSTRUMENT USED BY A FIRM OR GOVERNMENT TO RAISE CAPITAL  CAPITAL IS ANY ASSET USED IN PRODUCTION .

THE MAJOR CAPITAL MARKET PRODUCTS DIFFER BY  RISK  MATURITY  LIQUIDITY .

TYPES OF RISK INCOME RISK INTEREST RATE RISK INFLATION RISK DEFAULT RISK EVENT RISK LIQUIDITY RISK SETTLEMENT RISK CURRENCY RISK COUNTRY RISK .

TYPES OF MATURITY SHORT TERM LONG TERM PERPETUAL .

NON-TRANSFERABLE .EQUITIES .CERTIFICATES OF DEPOSIT .BUILDING SOCIETY DEPOSITS .TRANSFERABLE .GILTS .TYPES OF LIQUIDITY .

RISK/RETURN SPECTRUM TREASURY BILLS GOVERNMENT BONDS SECURED BONDS UNSECURED BONDS CONVERTIBLE BONDS PREFERRED STOCK EQUITY .

CAPITAL MARKET PLAYERS ISSUERS INTERMEDIARIES INVESTORS .

CUSTODIAN PROVIDERS . CLEARING HOUSES. PENSION FUNDS  VENTURE CAPITALISTS  CHARITIES  RETAIL INVESTORS  GOVERNMENTS  USERS OF CAPITAL  GOVERNMENTS.MARKET PLAYERS  PROVIDERS OF CAPITAL/INVESTORS  BANKS  GENERAL INSURERS AND LIFE INSURERS. CORPORATES  INTERMEDIARIES  INVESTMENT BANKS  BROKERS  EXCHANGES.

FORCES ACTING ON FINANCIAL SERVICES INDUSTRY DISINTERMEDIATION SECURITISATION TECHNOLOGY GOVERNMENT ECONOMIC SOCIAL GLOBALISATION OF SOME OF FINANCIAL SERVICES FINANCIAL SERVICES INDUSTRY GLOBALISATION OF SOME OF FINANCIAL MARKETS FINANCIAL INDUSTRY CONVERGENCE FINANCIAL INDUSTRY FUNCTIONAL SPECIALISATION .

INVESTMENT BANKING ACTIVITIES INVESTMENT BANK REVENUE GENERATING ACTIVITIES SUPPORT ACTIVITIES SUPPORT ACTIVITIES PRIMARY MARKET MAKING SECONDARY MARKET MAKING CORPORATE RESTRUCTURING CORPORATE RESTRUCTURING SECONDARY MARKET MAKING PRIMARY MARKET MAKING CORPORATE FINANCE DEALER ACTIVITY EXPANSION EXPANSION DEALER ACTIVITY CORPORATE FINANCE CONTRACTION MUNICIPAL FINANCE BROKERAGE ACTIVITY CONTRACTION BROKERAGE ACTIVITY MUNICIPAL FINANCE OWNERSHIP & CONTROL OWNERSHIP & CONTROL FINANCIAL ENGINEERING FINANCIAL ENGINEERING MBS MBS ASSET BACKED SECURITIES ASSET BACKED SECURITIES DERIVATIVES PRODUCTS DERIVATIVE PRODUCTS CLEARING CLEARING RESEARCH RESEARCH TRADING TRADING SPECULATION ARBITRAGE ARBITRAGE SPECULATION OTHER OTHER ADVISORY SERIVICES PORTFOLIO MANAGEMENT PORTFOLIO MANAGEMENT VENTURE CAPITAL VENTURE CAPITAL INTERNAL FINANCE INTERNAL FINANCE [FUNDING] [FUNDING] INFORMATION INFORMATION SERVICES SERVICES .

FIXED-INCOME SECURITIES.THE CREATION OF FINANCIAL INSTRUMENTS • THERE ARE FOUR PRIMARY WAYS THAT EQUITIES. AND WARRANTS COME INTO EXISTENCE: – – – – • PRIVATE PLACEMENTS PUBLIC OFFERINGS AUCTIONS SHORT SELLING THE “PRIMARY” MARKET INVESTMENT BANKING IS THE ACTIVITY OF HELPING WITH INITIAL SALE OF THE SECURITIES .

THE PRIMARY MARKET  STOCK EXCHANGES ARE THE CONDUIT FOR LINKING EQUITY ISSUERS WITH INVESTORS  COMPANIES RAISE EQUITY CAPITAL BY OBTAINING EXCHANGE LISTINGS AND ISSUING EQUITY THROUGH THE EXCHANGE TO INVESTORS  EXCHANGES REGULATE THE PROCESS OF ISSUING EQUITY TO PROVIDE AN EFFICIENT MARKET PLACE FOR ISSUERS AND A DEGREE OF SAFETY TO INVESTORS  EXCHANGE REGULATIONS FOCUS ON INSURING THAT ISSUERS MEET CERTAIN MINIMUM OPERATING STANDARDS AND THAT INFORMATION PROVIDED TO INVESTORS IS FULL. FAIR AND ACCURATE  EQUITY REGULATION IS DESIGNED TO INSURE .

MARKETS  STOCK EXCHANGES OFFER:  LIQUIDITY  PRICE INFORMATION  EFFICIENT PRICES  EFFICIENT SETTLEMENT  WIDE RANGE OF STOCKS  TRADING PRACTICES MONITORED .

ORDERS  MARKET ORDER  AN ORDER TO BE EXECUTED IMMEDIATELY AT THE BEST POSSIBLE PRICE  POSSIBLE ON OPEN OUTCRY EXCHANGES TO TRADE INSIDE THE POSTED BID AND OFFERS  A LIMIT ORDER IS AN ORDER TO BE EXECUTED AT A SPECIFIED PRICE OR BETTER  A STOP ORDER IS AN ORDER THAT BECOMES A MARKET ORDER IF THERE IS A SPECIFIED PRICE OR WORSE  THESE CAN BE “GOOD TODAY” OR “GOOD UNTIL CANCELLED” .

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