《Economics from Miss Chen》Chp8.pptVIP

Chapter 8 The Stock Market Information:Evolution of the Stock Market Origin 17th century London Coffee houses Purpose To form joint-stock companies to undertake risky trading ventures. Stock Exchanges and Future Markets Board to Boardless Stock Exchange 24-hour world stock market 8.1 ELEMENTS OF THE STOCK MARKET Security a piece of paper in which an organization, either business or government, acknowledge a financial obligation. Bond securities issued to the lenders with large numbers sums of money by some organization, such as the government. Security Market where the holders of securities can buy and sell Stock’s Category Definition the shares in proportion to contribution to the company with vote. Ordinary shares where the shareholders bear the ultimate risk of loss should the company fail, they have no preferential right to the return of their funds. Preference shares the shareholders have fixed payment (not fluctuating with the good or bad performance of the company), and have a preference over the ordinary shareholders. when liquidation, the shareholders have preference with regard to repayment of capital. without votes, the shareholders cannot take part in the operation of the company Comparison preference shares is less risky than ordinary shares, with limited participation in the profit and decision making. Stock’s Value Par value the amount price recorded on the shares. Market value Issue price what shareholders pay when the shares are first offered to investors. Exchange price A.B.H.N.S. Blue chip Red chip 8.2 THE ROLE OF THE AUSTRALIAN STOCK EXCHANGE Stock Exchange offers several import benefits: Liquidity shareholders can generally convert their shares to cash at short notice in the ongoing market. Valuation value one’s holdings of shares almost on a second by second basis. Protection ensure a high standard of business behavior on the part of the management of listed companies. Secondary Market (circulating market) where the issued shares can be con