Week2Amodernfinancialsystemanoverview分解.ppt

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 1.3 Financial instruments (cont.) Derivatives 衍生品 A synthetic security providing specific future rights that derives its price from: a physical market commodity gold and oil financial security Interest-rate-sensitive debt instruments, currencies and equities Used mainly to manage price risk exposure and to speculate (cont.) 1.3 Financial instruments (cont.) Four basic derivative contracts 衍生合约 1. Futures contract (Chapter 18 and 19) 期货合约 2. Forward contract (Chapters 17, 18 and 19) 远期合约 3. Option contract (Chapters 18 and 20) 期权合约 4. Swap contract (Chapters 18 and 21) 掉期合约 1.4 Financial markets Matching principle Primary and secondary market transactions Direct and intermediated finance Wholesale and retail markets Money markets Capital markets Matching principle Short-term assets should be funded with short-term (money market) liabilities; e.g. seasonal inventory needs funded by overdraft Longer term assets should be funded with equity or longer term (capital market) liabilities; e.g.: equipment funded by debentures lack of adherence to this principle accentuated effects of frozen money markets with the ‘sub-prime’ market collapse Primary and secondary market transactions Primary market transaction The issue of a new financial instrument to raise funds to purchase goods, services or assets by: businesses company shares or debentures governments Treasury notes or bonds individuals mortgage Funds are obtained by the issuer (cont.) Primary and secondary market transactions (cont.) Secondary market transaction The buying and selling of existing financial securities No new funds raised and therefore no direct impact on original issuer of security Transfer of ownership from one saver to another saver Provides liquidity, which facilitates the restructuring of portfolios of security owners Direct and intermediated finance Direct finance Users of funds obtain finance through primary market via direct re