工商导论9[精选].pptVIP

Topics covered Introduction Stock Basics Bond Basics Introduction In order to raise long – term funds, as discussed earlier, a corporation can issue stock for equity financing or bonds for debt financing. As stocks represents ownership and bonds represent debt, they both represent a secured (asset based) claim on the part of investors and are known as securities. The market for dealings of stocks and bonds is collectively called the securities market. Introduction Definition: An instrument representing ownership (stocks), a debt agreement (bonds) Bonds are debt, whereas stocks are equity. This is the important distinction between the two securities. By purchasing equity (stock) an investor becomes an owner in a corporation. Ownership comes with voting rights and the right to share in any future profits. By purchasing debt (bonds) an investor becomes a creditor to the corporation (or government). The primary advantage of being a creditor is that you have a higher claim on assets than shareholders do: that is, in the case of bankruptcy, a bondholder will get paid before a shareholder. However, the bondholder does not share in the profits if a company does well - he or she is entitled only to the principal plus interest. To sum up, there is generally less risk in owning bonds than in owning stocks, but this comes at the cost of a lower return. Introduction Securities markets can be divided into primary and secondary markets. When a new stock or bond is issued, it is handled by primary market. To bring the new issue to the market, the issuing corporation needs the service of an investment banker which underwrites (purchases) the new issue and distributes it through groups of other bankers and brokers into the hands of individual investors. Stock Basics Stock means ownership. As an owner, you have a claim on the assets and earnings of a company as well as voting rights with your shares. Stock is equity, bonds are debt. Bondholders are guaranteed a return on their