參考講稿師哥

Classifications

of

Financial

MarketsDebt

MarketsShort-Term

(maturity

<

1

year)

Money

MarketLong-Term

(maturity

>

1

year)

Capital

MarketEquity

MarketsCommon

Stock2-1Copyright

?

2006

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Addison-Wesley.

All

rights

reserved.2-2Copyright

?

2006

Pearson

Addison-Wesley.

All

rights

reserved.Characteristics

of

Debt

MarketsInstrumentsDebt

instrumentsBuyers

of

debt

instruments

are

suppliers

(of

capital)

tothe

firm,

not

owners

of

the

firmDebt

instruments

have

a

finite

life

or

maturity

dateAdvantage

is

that

the

debt

instrument

is

a

contractualpromise

to

pay

with

legal

rights

to

enforce

repaymentDisadvantage

is

that

return/profit

is

fixed

or

limited2-3Copyright

?

2006

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Addison-Wesley.

All

rights

reserved.Characteristics

of

Equity

MarketsInstrumentsEquity

instruments

(common

stock

is

mostprevalent

equity

instrument)Buyers

of

common

stock

are

owners

of

the

firmCommon

stock

has

no

finite

life

or

maturity

dateAdvantage

of

common

stock

is

potential

high

esince

return

is

not

fixed

or

limitedDisadvantage

is

that

debt

payments

must

bemade

before

equity

payments

can

be

made2-4Copyright

?

2006

Pearson

Addison-Wesley.

All

rights

reserved.Investing

in

StocksRepresents

ownership in

a

firmEarn

a

return

in two

waysPrice

of

the

stock

risesover

timeDividends

are

paid

tothe

stockholderStockholders

have claim

on

all

assetsRight

to

vote

for directors

and

on certain

issuesTwo

typesCommon

stockRight

to

voteReceive

dividendsPreferred

stockReceive

a

fixeddividendDo

not

usually

vote2-5Copyright

?

2006

Pearson

Addison-Wesley.

All

rights

reserved.Characteristics

of

Financial

Markets1. Debt

Markets–

Although

less

well-known

by

the

average

person,debt

markets

in

U.S.

are

much

larger

in

total

dollarsthan

equity

markets,

due

to

greater

number

ofparticipant

classes

(households,

businesses,government,

and

foreigners)

and

size

of

individualparticipants

(businesses,

and

government)2-6Copyright

?

2006

Pearson

Addison-Wesley.

All

rights

reserved.Characteristics

of

Financial

Markets2. Equity

Markets–

Although

U.S.

markets

are

highly

efficient,

theworld’s

largest,

and

more

familiar

to

the

averageperson,

they

are

far

smaller

than

the

U.S.

debtmarkets

largely

due

to

the

fact

that

the

onlyapplicable

participants

are

businesses2-7Copyright

?

2006

Pearson

Addison-Wesley.

All

rights

reserved.Classifications

of

Financial

MarketsPrimary

MarketNew

security

issues

sold

to

initial

buyersSecondary

MarketSecurities

previously

issued

are

boughtand

sold2-8Copyright

?

2006

Pearson

Addison-Wesley.

All

rights

reserved.Classifications

of

Financial

MarketsExchangesTrades

conducted

in

central

locations(e.g.,

New

York

Stock

Exchange)Over-the-Counter

MarketsDealers

at

different

locations

buy

and

sellNYSE

home

page2-9Copyright

?

2006

Pearson

Addison-Wesley.

All

rights

reserved.Asymmetric

Information:Adverse

Selection

and

MoralHazardAdverse

SelectionBefore

transaction

occursPotential

borrowers

most

likely

to

produceadverse e

are

ones

most

likely

toseekloan

and

be

selected2-10Copyright

?

2006

Pearson

Addison-Wesley.

All

rights

reserved.Asymmetric

Information:Adverse

Selection

and

MoralHazardMoral

HazardAfter

transaction

occursHazard

that

borrower

has

incentives

toengage

in

undesirable

(immoral)

activitiesmaking

it

more

likely

that

won't

pay

loan

backChapter

NineThe

CapitalMarketsSlide9–12Copyright

?

2004

Pearson

Education

Canada

Inc.CapitalMarketsOriginal

maturity

is

greater

than

one

yearBest

known

capital

market

securities:Stocks

and

bondsPrimary

issuers

of

securities:Federal

and

local

governmentsCorporationsLargest

purchasers

of

securities:You

and

meSlide9–13Copyright

?

2004

Pearson

Education

Canada

Inc.Capital

Market

TradingPrimary

market

for

initial

sale

(IPO)Secondary

marketOver-the-counterOrganized

exchanges

(i.e.,

TSX)Slide9–14Copyright

?

2004

Pearson

Education

Canada

Inc.Want

to

be

listed

on

theTSX?You

will

need:At

least

300

investorsA

minimum

of

1

million

shares

traded

publicly,with

a

market

value

of

$4

millionAny

shareholder

with

more

than

10%

of

thestock

must

provide

information

on

theirexperience

in

businessA

Participating

Organization

of

the

TSX

mustsponsor

the

companySlide9–15Copyright

?

2004

Pearson

Education

Canada

Inc.Want

to

be

listed

on

the

NYSE?You

will

need

at

least:2000

stockholders,

each

owning

at

least

100sharesA

minimum

of

1.1

million

shares

tradedpubliclyPretax

earnings

of

$2.5

million

at

the

time

oflisting$2

million

in

pretax

earning

in

each

of

the

twoprior

yearsNumber

of

Listed

Companies

YearlyComparison

with

NYSE,

AMEX,

NasdaqandTSXSlide9–16Copyright

?

2004

Pearson

Education

Canada

Inc.Canada

BondsSlide9–17Copyright

?

2004

Pearson

Education

Canada

Inc.Slide9–18Copyright

?

2004

Pearson

Education

Canada

Inc.Canada

Bond

Interest

RatesNo

default

riskVery

low

interest

ratesFigure

2:

Interest

Rate

on

Long-Term

Canada

Bonds

and

the

Inflation

Rate,

1976–2001Canada

Bond

Interest

RatesSlide9–19Copyright

?

2004

Pearson

Education

Canada

Inc.Slide9–20Copyright

?

2004

Pearson

Education

Canada

Inc.Corporate

BondsFace

value

of$1000Pay

interest

semi-annuallyCan

be

redeemed

anytime

the

issuerwishesDegree

of

risk

varies

with

each

bondInterest

rate

varies

with

level

ofriskCorporate

Bond

Interest

RatesSlide9–21Copyright

?

2004

Pearson

Ed