NEW2012Money,BankingandFinancialMarkets1题库.ppt

Valuing Stocks Valuing Stocks Implications of the Dividend-Discount Model with Risk: Stock Prices are High When Current dividends are high (Dtoday is high) Dividends are expected to grow quickly (g is high) The risk-free rate is low (rf is low) The risk premium on equity is low (rp is low) Valuing Stocks The Theory of Efficient Markets The basis for the theory of efficient markets is the notion that the prices of all financial instruments, including stocks, reflect all available information When markets are efficient, the prices at which stocks currently trade reflect all available information, so that future price movements are unpredictable. The Stock Market’s Role in the Economy Bubble: a persistent and expanding gap between actual stock prices and those warranted by the fundamentals; usually created by mass enthusiasm. Chapter 9 Derivatives: Futures,  Options, and Swaps The emergence of derivatives The purpose of derivatives is to transfer risk from one person or firm to another. Three Basic Categories of Derivatives Forward and futures Options Swaps Forward and Futures Forward (Forward Contract): an agreement to exchange an asset for money in the future at a currently agreed upon price. 当市场价格高于合约约定的执行价格时，由卖方向买方支付价差金额；当市场价格低于执行价格时，由买方向卖方支付价差金额。 Forward The important thing to note about a forward contract is that it is a binding contract and both parties must deliver on the specified date. Forward Relative Terminology Long position Short position Delivery price Maturity Forward Loss / Profit of Forward Contracts Suppose an investor signed a long position forward contract on June 8, 2009, agreeing on the purchase of GBP1million with the foreign exchange rate of USD1.6056 against GBP on the 90th day. When the spot rate rises to USD1.6500 against GBP at the end of the 90th day When the spot rate falls to USD 1.5500 against GBP at the end of the 90th day Forward Generally, Profit / Loss of long position forward contrac