Gitman投资学基础ch02.ppt

Margin Formulas Basic Margin Formula Example of Using Margin Table 2.3 The Effect of Margin Trading on Security Returns Margin Formulas (cont’d) Return on Invested Capital Example of Return on Invested Capital Basic Types of Securities Transactions Short Selling Investor sells securities they don’t own Investor borrows securities from broker Broker lends securities owned by other investors that are held in “street name” “Sell high and buy low” Investors make money when stock prices go down Short Selling Advantages Chance to profit when stock price declines Disadvantages Limited return opportunities: stock price cannot go below $0.00 Unlimited risks: stock price can go up anunlimited amount If stock price goes up, short seller still needs to buy shares to pay back the “borrowed” shares to the broker Short sellers may not earn dividends Copyright ? 2011 Pearson Prentice Hall. All rights reserved. 2-* Copyright ? 2011 Pearson Prentice Hall. All rights reserved. Chapter 2 Securities Markets and Transactions Securities Markets and Transactions Learning Goals Identify the basic types of securities markets and describe their characteristics. Explain the initial public offering (IPO) process. Describe broker and dealer markets, and discuss how they differ from alternative trading systems. Securities Markets and Transactions Learning Goals (cont’d) Review the key aspects of the globalization of securities markets, and discuss the importance of international securities markets. Discuss trading hours and regulation of securities markets. Explain long purchases, margin transactions and short sales. Types of Markets Money Markets: the market where short-term securities are bought and sold Capital Market: the market where long-term securities such as stocks and bonds are bought and sold Primary Market: the market in which new issues of securities are sold to the public Secondary Market: the market in which securities are traded after they have been issued Primary Marke