《金融市场与机构 Jeff Madura》ch01.pptVIP

1 Role of Financial Markets and Institutions Chapter Objectives Describe the types of financial markets Describe the role of financial institutions with financial markets Identify the types of financial institutions that facilitate transactions Overview of Financial Markets Financial markets provide for financial intermediation--financial savings (Surplus Units) to investment (Deficit Units) Financial markets provide payments system Financial markets provide means to manage risk Overview of Financial Markets Broad Classifications of Financial Markets Money versus Capital Markets Primary versus Secondary Markets Organized versus Over-the-Counter Markets Primary vs. Secondary Markets PRIMARY New Issue of Securities Exchange of Funds for Financial Claim Funds for Borrower; an IOU for Lender SECONDARY Trading Previously Issued Securities No New Funds for Issuer Provides Liquidity for Seller Money vs. Capital Markets Money Short-Term, 1 Year High Quality Issuers Debt Only Primary Market Focus Liquidity Market--Low Returns Capital Long-Term, 1Yr Range of Issuer Quality Debt and Equity Secondary Market Focus Financing Investment--Higher Returns Organized vs. Over-the-Counter Markets Organized Visible Marketplace Members Trade Securities Listed New York Stock Exchange OTC Wired Network of Dealers No Central, Physical Location All Securities Traded off the Exchanges Securities Traded in Financial Markets Money Market Securities Debt securities Only Capital market securities Debt and equity securities Derivative Securities Financial contracts whose value is derived from the values of underlying assets Used for hedging (risk reduction) and speculation (risk seeking) Debt vs. Equity Securities Debt Securities: Contractual obligations (IOU) of Debtor (borrower) to Creditor (lender) Investor receives interest Capital gain/loss when sold Maturity date Debt vs. Equity Securities Equity Securities: Claim with ownership rights and responsibilities Inv