THEME 2.

INVESTMENT MARKET AND ITS INFRASTRUCTURE

PLAN.

1.1. The concept of an investment market.

1.2. Infrastructure of the investment market and its participants.
1.3. Degree of activity and investment market conditions.
1.4. The process of studying the investment market.
1.5. Scheme of market interactions. The market of real and financial assets of
the enterprise.
Primary and secondary market.

1.1.Concept of the investment market.

An investment market is a place where citizens and organizations who

want to borrow money meet those who have this money. Investment activity
always starts with the market, since the company does not have enough capital and
capital to start a planned project, so it tries to attract lending capital.

The investment market is a system that includes:

Δ subjects (investors, contractors, customers, design and research organizations);
Δ objects (tangible and intangible);
Δ infrastructure of the market (banks, exchanges, pension funds, insurance
companies, investment companies, investment funds, engineering consulting firms,
court, arbitration);
Δ market mechanism (supply and demand for investment goods, capital transfers
between industries);
Δ control by the state.
1.2. Infrastructure of the investment market and its participants.

The most important part of the investment market is investment objects (goods).
The production and movement of these goods on the market is provided elements
of investment infrastructure. The main task of the investment infrastructure is
servicing the investment market and meeting the investment demand.

There are several intermediaries in the market that form the infrastructure:
- design and construction firms;
- Independent registrars (keep a register of securities owners);
- mortgage banks (provide loans to investors on the mortgage of real estate or land
for development);

-commercial banks;
- investment banks (specializing in securities operations, on the implementation of
investment projects);
- depositaries;
- commodity and stock exchanges;
- tender committees;
- firm-developers (legal entity assuming functions for the implementation of
invested capital, has 5-10% of the project);
- investment funds (oriented to work with small unqualified investors);
- Engineering and consulting companies (provide advice on profitable investment
and prepare the necessary documentation for the investor);
- leasing companies (buy on credit and provide long-term lease of equipment to
investors);
- dealerships;
- brokerage companies;
- insurance companies (accumulate significant funds in the form of fears of resorts
and place them on financial markets).
1.3. Degree of activity and investment market conditions.

Each investor needs to know what degree of investment market activity to form an
investment portfolio:
Δ rise of market conditions - increase of activity of market processes, demand for
investment objects increases the price, competition among intermediaries;
Δ market boom - the growth of demand for all investment products, the supply is
insignificant, prices increase with the intermediaries' income;

Δ weakening of the market conditions - reduction of investment activity, demand

saturation and supply surplus, lowering of prices for investment objects and
income of investors and intermediaries;
Δ market downturn - low level of demand and reduction of the supply of
investment objects, prices are reduced, investments are loss-making.

1.4.Process study of the investment market.

The process of studying an investment market consists of the stages at which

assessment and forecasting are carried out:
1. macroeconomic indicators of the investment market development (information
is used for sectoral diversification of investments);
2. investment attractiveness of industries;
3. investment attractiveness of regions (information is used in real investment to
diversify activities);
4. The attractiveness of individual companies and firms (information used in
making investment decisions).

1.5. Market of real and financial assets of enterprises. Primary and secondary
market.
The real assets market offers investment goods and services: real estate,
construction sites (mortgage market); equipment, building materials, research,
design, construction, assembly (contract market); new technologies, licenses,
patents, know-how, engineering services (intellectual property market). On the
labor market, the labor force is sold as an investment product (the ability to work
for hire is sold). Real assets are realized on terms of "SPOT" (within a few days),
futures contracts (delivery of goods after a certain time).
The market for financial assets includes the money market (securities with a
maturity of up to 1 year), the capital market (long-term securities and corporate
shares), the credit market (long-term debt obligations).

The capital market is divided into primary (trading in new securities) and
secondary (trading of securities issued earlier and in circulation). Stock exchanges
are secondary markets of securities, because they are quoted securities that are in
circulation.