國(guó)際金融課件fim2014imba-6.f7financial

Financial

MarketsStockExchangeNumberofCompaniesListedMarketCapitalization(inmillionsofdollars)AverageDailyVolume(inmillionsofshares)TradingHoursPercentofSharesOwnedbyIndividualsPercentofSharesOwnedbyInstitutionsorFundsRestrictionsonForeignOwnershipAustralia1,506$164,930102.810:15-12:152:00-3:1510%90%Onlyonstrategicindustriessuchasuranium.Belgium34050,535NA10:00-3:30NANANoneCanada(Montreal)1,188368,9175.369:30-4:0052%48%Somefinancialinstitutionsaresubjecttoamaximumlimit.Canada(Toronto)NaNANA9:30-4:00NANASssMontrealexchange.Canada(Vancouver)2,3344,515146:30-1:3080%20%NoneFrance888244,998NA10:00-5:0030%20%Investorsinnon-ECcountriesaresubjecttoamaximumlimit.HongKong30871,697NA10:00-12:302:30-3:30NANANoneItaly211135,428NA10:00-1:45NANANoneJapan(Osaka)NANA118.99:00-11:001:00-3:00NANANoneJapan(Tokyo)NANA1,0409:00-11:001:00-3:0023.6%72%NoneSouthKoreaNA57,0079.79:40-11:401:20-3:2068%29.3%Nonresidentscaninvestinstocksonlythroughmutualfunds.StockExchangeNumberofCompaniesListedMarketCapitalization(inmillionsofdollars)AverageDailyVolume(inmillionsofshares)TradingHoursPercentofSharesOwnedbyIndividualsPercentofSharesOwnedbyInstitutionsorFundsRestrictionsonForeignOwnershipMexico309NA32.910:30-1:3058.33%41.67%NANetherlands572$91,720NA10:00-4:30NANANoneNewZealand38715,2086.59:00-11:002“15-3:30NANAForeignersmusthaveapprovalforownershipof24%ormore.Norway13713,090NA10:00-3:0022.5%15%Limitsareimposedonforeignownershipofstocks.Singapore326NANA10:00-12:302:30-4:0025%75%Restrictionsapplyforstocksinsomeindustries.Switzerland(Basel)483NANA9:10-1:30NANARegisteredsharesarerestrictedtoresidents.Switzerland(Geneva)494100,032NA9:00-1:15NANASeeBaselexchange.Switzerland(Zurich)2,914125,403NA9:30-1:1510%NASeeBaselexchange.TaiwanNA92,0083549:00-12:0040.7%50.1%Foreigninvestorsarerequiredtoapplyforaremittancepermit.UnitedKingdom2,656NANA9:00-5:0020%80%NoneUnitedStates(NewYork)1,6812,400,0001619:30-4:00NANANoneGermany741186,6017,35411:30-1:00NANANoneCHARACTERISTICEOFCONTEMPORARYTYPESOFBONDSBondtypeCharacteristicsZero(orlow)couponBondsIssuedwithno(zero)oraverylowcoupon(statedinterest)rateandsoldatalargediscountfrompar.Asignificantportion(orall)oftheinvestor’sreturnthereforecomesfromgaininvalue(i.e.,parvalueminuspurchaseprice).Generallycallableatparvalue.Becausetheissuercanannuallydeductthecurrentyear’sinterestaccrualwithouthavingtoactuallypaytheinterestuntilthebondmatures(oriscalled),itscashfloweachyearisincreasedbytheamountofthetaxshieldprovidedbytheinterestdeduction.JunkbondsFloatingratebondsDebtratedBaorlowerbyMoody’sorBBorlowerbyStandard&Poor’s.Duringthemonlyusedbyrapidlygrowingfirmstoobtaingrowthcapital.Mostoftenasawaytofinancemergersandtakeoversofotherfirms.High-riskbondswithhighyields-typicallyyielding3percentmorethanthebest-qualitycorporatedebt.Asaresultofanumberofmajordefaultsduringtheearly1990s,thepopularityofthesebondshasbeensomewhatreduced.Statedinterestrateisadjustedperiodicallywithinstatedlimitsinresponsetochangesinspecifiedmoneyorcapitalmarketrates.Popularwhenfutureinflationandinterestratesareuncertain.RatingDefinition___________________________________________AAAAnobligationratedAAAhasthehighestratingassignedbyS&P.Theobligor’scapacitytomeetitsfinancialcommitmentontheobligationisextremelystrong.AAAnobligationratedAAdiffersfromthehighestratedobligationsonlyinasmalldegree.Theobligor’scapacitytomeetitsfinancialcommitmentontheobligationisverystrong.AAnobligationratedAissomewhatmoresusceptibletotheadverseeffectsofchangesincircumstancesandeconomicconditionsthanobligationsinhigherratedcategories.However,theobligor’scapacitytomeetitsfinancialcommitmentontheobligationisstillstrong.RatingRequestAssignanalyticalteamConductbasicresearchMeetissuerMeetingRatingCommitteeIssueratingSurveilenceAppealsprocessDowJonesIndex

1.Whatisstockexchangeindex?2.Whydoweneedstockexchangeindex?3.Howcanwecalculatestockexchangeindex?4.WhatwasthewaytocalculateDowJonesIndexattheverybeginning?5.Whatwerecausesforbankingcrisisinearlier1930s?6.Howcouldthebankingcrisisbesolvedatthattime?WhywesaythatJ.PMorgen“savedUnitedStates”?7.WhatistheroleofstockexchangeforthedevelopmentofU:Seconomy?8.WhatdoesthestoryofCocaColatellus?9.WhatwasthefunctionofJunkBonds?10.WhatdoyouexpectforthedirectionofDowJones?ForwardForeignExchangeMarketSpotForeignExchangeMarketEurocurrencyMarketandEuro-creditMarketEurobondMarketInternationalStockMarketCurrencySwapMarketInterestRateSwapMarketFuturesMarketOptionsMarketFinancialMarketsFOREIGNEXCHANGETRADERSEverybodyspeculatesinonewayoranother,butonlyafewthousandprofessionalsmakeforeignexchangespeculationtheirliving.Asof1983,thecoreoftheprofessionconsistedoftradersinmajorbanksinthefollowingcenters:NumberofBankswithForeignNumberExchangeDepts.TradersNorthAmericaNewYork96667Toronto1288Chicago1484SanFrancisco852LosAngeles838AsiaandtheMiddleEastTokyo27154Singapore49234HongKong54246Bahrain26106NumberofBankswithForeignNumberExchangeDepts.TradersWesternEuropeLondon2271,645Luxemburg68356Paris64348Zurich30199Frankfurt47300Milan35212Brussels29186Source:Mayer,Duesenberry,andAliber(1984,p.503).CorporateBond-RatingSystemsDefaultStandardRiskExplanationMoody’s&Poor’sPremiumBestquality.smallestdegreeofriskAaaAAALowestHighquality.slightlymorelong-termriskthanAa1AA+·TopratingAa2AA·Aa3AA－·Upper-mediumgrade.possibleimpairmentinA1A+·thefutureA2A·A3A－·Mediumgrade.LackoutstandinginvestmentBaa1BBB+·characteristicsBaa2BB·Baa3BBB－·Speculativeissues.ProtectionmaybeveryBa1BB+·moderateBa2BB·Ba3BB－·Veryspeculative.MayhavesmallassuranceofB1B+·InterestandprincipalpaymentsB2B·B3B－·Issuesinpoorstanding,maybeindefaultCaaCCC·Speculativeinahighdegree.WithmarkedCaCC·ingsLowestquality.PoorprospectsofattainingrealCC·InvestmentstandingDHighestNote:InvestmentgradequalitybondsarechoseratedBaaorabovebyMoody’s(StandardandPoor’sBBB).Financialinstitutionsaretypicallyallowedtopurchaseonlyinvestmentgradesecurities.

JUNKBONDS1.BondsinitiallyratedBaaorbetter(AllJunkbondsbeforethe1970swerethiskind)Issuedby“FALLENANGELS”Havereasonablecoupons,butsoldatdeepdiscountsTherefore,HavehighyieldtomaturityToreflecttheirhigherriskButweredowngradedwhenissuingfirmwasfacedwithFinancialdifficulties2.Debentures,thataregenerallysubordinateddebtRiskyatthetimeofissuedIssuedtofinanceaLBO,MergerorFinancelowratedfirmsHavingdifficultiesaccessingmorecapitalThiskindprovidesventurecapitalBONDSVALUATION(ratingingeneral)1.Amountoffirm’sfixedcontractualcashpaymente.g.Interest&principalThefirm’sexpectedcashflowLengthoftimethefirmhasbeenprofitableVariabilityofthefirmearningsVALUATION:HIGHYIELD(JUNK)BONDSUSEOFNETPRESENTVALUEMETHODMARKETEXPECTATIONMETHODREASONSTOINVESTINJUNKBONDS:LEADSTOCAPITALGAINSFORTHEINVESTOREPOTENTIALFORTHEINVESTORRISKANDDRAWBACKSFORTHEINVESTORLIQUIDITYFORTHEINVESTORTAXADVANTAGESFORTHEINVESTORAPPLICATION:TOMEDIUMSIZEDFIRMS;-infinancialdifficulties-WithaneedforexpansionEFFECTSONFIRM’SCAPITALSTUCTURE:PrincipalTheoryOfTheFirm’sCapitalStructureStatesUsetheirretainedearningsThenusereserveborrowingcapacity(debt)AndonlyissuenewcommonstockaslastalternativeSOURCEOFCAPITALOPTIONS:Short–termmoneyonaseniorsecuredbasisfrombankLong-termmoneyfrominsurancecompaniesVIAprivateplacementEquitysaleout(offerings)Junkbondmarket(sub-ordinatedebt)(allwithrestrictivecomenants)Junkbondmarket:Providesexpandingcompaniesaccesstothekindoflongterm,relativelycovenantfreecapital,thatwasperviousiynotavailableThemarketguaranteeliquiditybyofferingjunksaplacetobid.People’sRepublicofChina中華人民共和國(guó)61/2%BondsdueFebruary17,2004Price99.406%(Plusaccruedinterest.Ifany.FromFebruary17.1994.)CSFirstBostonBankofChinaDresdnerBankJ.P.MorganSecuritiesLtd.NomuraInternationalBankofCommunicationsDaiwaEuropeLimitedParibasCapitalMarketsSmithBarneyShearsonInc.MerrillLynch&Co.IBJInternationalplcCommerzbankGoldmanSachsInternationalLimitedMorganStanley&Co.InternationalSwissBankCorporationBear,StearnsInternationalLimitedLTCBInternationalLimitedSalomonBrothersIncDBSBankLehmanBrothersNikkoEuropePlcUBSLimitedCITICIndustrialBankSamuelMontagu&Co.LimitedPeople’sConstructionBankofChinaYamaichiInternational(Europe)LimitedLAURAASHLEYGROUP￡50,000,0005YearRevolvingCreditFacilityArrangedby:CiticorpInvestmentBankLimitedParticipants:TheBankofTokyo,Ltd.Citibank,N.A.DenDanskeBankMidlandBankTheDai-IchiKangyoBank,LimitedBancaPopolarediNovaraBankMees&HopeNVFacilityAgent:CiticorpInvestmentBankLimitedFinancialAdvisorstoLauraAshleyGroupLazardBrothers&Co.,LimitedMobilExplorationNorwayInc.,NorwegianBranchU.S.$300,000,000RevolvingCreditFacilityUnderwritersandSeniorLeadManagers:Citibank,N.A.NationalWestminsterBankABNAMROBankN.V.BelgianBranchBayerischeLandesbankGirozentraleLondonBranchCreditLyonnaisLondonBranchTheHongkongandShanghaiBankingCorporationLimitedRabobandNederlandSvenskaHandelsbankenBankofAmericaNT&SASocieteGeneraleLondonBranchCo-ArrangerandFacilityAgent:CiticorpInvestmentBankLimitedLeadManagers:BanqueNationaledeParisTheDai–IchiKangyoBank,LimitedManagers:BanqueParibasCanadianImperialBankofCommerceDenDanskeBankNMBBankScotiabank(Ireland)LimitedWestLBGroupBanqueIndosuezNorgeA/STheSumitomoBank,LimitedCo-ArrangerNetWestCapitalMarketsLimitedIssuingCorporationInvestmentBankerInvestmentBankerOriginatingInvestmentBankerInvestmentBankerInvestmentBankerUnderwritingSyndicateSellingGroupPurchasersofSecuritiesThesellingprocessforanewsecurityissueSECURITYSELLINGPROCESSTypeofShort-termfinancingSourceCestorconditionsCharacteristicsⅠ.Spontaneoussourcesofshort-termfinancingAccountspayableSuppliersofmerchandiseNostatedcostexceptwhenacashdiscountisofferedforearlypayment.Creditextendedonopenaccountfor0to120days.Thelargestsourceofshort-termfinancing.AccrualsEmployeesandgovernmentFree.Resultfromthefactthatwages(employees)andtaxes(government)arepaidatdiscretepointsintimeaftertheservicehasbeenrendered.Hardtomanipulatethissourceoffinancing.SUMMARYOFKEYFEATURESOFCOMMONSOURCESOFSHORT-TERMFINANCINGⅡ.Unsecuredsourcesofshort-termloansBanksources⑴Single-paymentnotesCommercialbanksPrimeplus0%to4%riskpremium—fixedorfloatingrate.Asingle-paymentloanusedtomeetafundsshortageexpectedtolastonlyashortperiodoftime.⑵LinesofcreditCommercialbanksPrimeplus0%to4%riskpremium—fixedorfloatingrate.Oftenmustmaintain10%to20%compensatingbalanceandcleanuptheline.Aprearrangedborrowinglimitunderwhichfunds,ifavailable,willbelenttoallowtheborrowertomeetseasonalneeds.⑶RevolvingcreditagreementsCommercialbanksPrimeplus0%to4%riskpremium—fixedorfloatingrate.Oftenmustmaintain10%to20%compensatingbalanceandpayacommitmentfeeofapproximately5%oftheaverageunusedbalance.Alineofcreditagreementunderwhichtheavailabilityoffundsisguaranteed.Oftenforaperiodgreaterthanoneyear.CommercialpaperOtherbusinesses,banks,lifeinsurancecompanies,pensionfunds,andmoneymarketmutualfundsGenerally1%to3%belowtheprimerateofinterest.Anunsecuredshort-termpromissorynoteissuedbythemostfinanciallysoundfirms.Maybeplaceddirectlyorsoldthroughcommercialpaperdealers.Ⅲ.Securedsourcesofshort-termloansAccountsreceivablecollateral⑴PledgingCommercialbanksandcommercialfinancecompanies2%to50%aboveprimeplusupto3%infees.Advance50%to90%ofcollateralvalue.Selectedaccountsreceivableareusedascollateral.Theborroweristrustedtoremittothelenderuponcollectionofpledgedaccounts.Doneonanonnotificationbasis.⑵FactoringFactors,commercialbanks,andcommercialfinancecompanies1%to3%discountfromfacevalueoffactoredaccounts.Interestleviedonadvancesof2%to4%aboveprime.Interestearnedonsurplusbalancesleftwithfactorofabout5%permonth.Selectedaccountsaresold—generallywithoutrecourse—atadiscount.Allcreditrisksgowiththeaccounts.Factorwillloan(makeadvances)againstuncollectedaccountsthatarenotyetdue.Factorwillalsopayinterestonsurplusbalances.Typicallydoneonanotificationbasis.Inventorycollateral⑴FloatingliensCommercialbanksandcommercialfinancecompanies3%to5%aboveprime.Advancelessthan50%ofcollateralvalue.Aloanagainstinventoryingeneral.Madewhenfirmhasstableinventoryofavarietyofinexpensiveitems.⑵TrustreceiptsManufacturers’captivefinancingsubsidiaries,commercialbanks,andcommercialfinancecompanies2%ormoreaboveprime.Advance80%to100%ofcostofcollateral.Loanagainstrelativelyexpensiveautomotive,consumer-durable,andindustrialequipmentthatcanbeidentifiedbyserialnumber.Collateralremainsinpossessionofborrower,whoistrustedtoremitproceedstolenderuponitssale.⑶WarehousereceiptsCommercialbanksandcommercialfinancecompanies3%to5%aboveprimeplusa1%to3%warehousefee.Advance75%to90%ofcollateralvalue.Inventoryusedascollateralisplacedundercontrolofthelenderbyputtingitinaterminalwarehouseorthroughafieldwarehouse.Athirdparty—awarehousingcompany—guardstheinventoryforthelender.Inventoryisreleasedonlyuponwrittenappovalofthelender.CharacteristicsofStockExchangesStockExchangeNumberofCompaniesListedMarketCapitalization(inmillionsofdollars)AverageDailyVolume(inmillionsofshares)TradingHoursPercentofSharesOwnedbyIndividualsPercentofSharesOwnedbyInstitutionsorFundsRestrictionsonForeignOwnershipAustralia1,506$164,930102.810:15-12:152:00-3:1510%90%Onlyonstrategicindustriessuchasuranium.BelgiumCanada(Montreal)3401,18850,535368,917N/A5.3610:00-3:309:00-4:00N/A52N/A48Somefinancialinstitutionsaresubjecttoamaximumlimitofequitythatcanbeheldbynonresidents.Canada(Toronto)Canada(Vancouver)FranceN/A2,334888N/A4,515244,998N/A14N/A9:30-4:006:30-1:3010:00-5:00N/A8030N/A2020SeeMontrealexchangeNomeInvestorsinnon-ECcountriescannotholdmorethan20%ofequitywithoutapprovalHongKongItalyJapan(Osaka)Japan(Tokyo)SouthKorea308211N/AN/AN/A71,697135,4282,747,9483,191,19157,007N/AN/A118.91,0409.710:00-12302:30-3:3010:00-1:459:00-11:001:00-3:009:40-11:401:20-3:20N/AN/AN/A23.668N/AN/AN/A7229.3NoneNoneNoneNoneNonresidentscaninvestinstocksonlythroughmutualfundsandconvertiblebondsMexicoNetherlandsNewZealand309572387N/A91,72015,20832.9N/A6.510:30-1:3010:00-4:309:30-11:002:15-3: