chapter3introductiontodirectfinancing(金融市场学).pptVIP

The purposes of this chapter are to explain how direct financing is organized through financial markets and to provide a basic understanding of the operations of these markets . The material presented in this chapter is developed further in chapter 9to12 where the four main financial markets are discussed. Study objectives From your study of this chapter you should be able to : Explain the general process of direct financing through financial markets; Describe the trading and settlement processes used by financial market ; Describe the general activities of the main participants in financial markets; Explain the ways in which secondary markets assist the performance of primary market; Explain the main implications of the efficient market hypothesis; Explain the main implications of price volatility in financial markets. 1.Overview of the direct financing Direct financing raises funds from investors through the issue of securities in financing markets. Deficit units issue securities by selling them to investors. The issue process is arranged by specialist wholesale banking . Direct financing raises funds from financial markets rather than from DTIs. This is an important distinction given that markets and DTIs are the two main sources of finance. 2.Securities A security is essentially a promise by the issuer to make one or more future payments that can be traded in a financial market. Debt securities Equity securities 3.Trading arrangements The financial markets are organized either by an exchange or by an association of market dealers . Auction market is an exchange –organized market Over-the counter market is a dealer-organized market The trading activities of a financial market can be divided into two parts : The deal-making arrangements The back-room functions of clearing and settlement that result in the traded securities being exchanged for cash. 4. Trading system Deal making can occur on a trading floor ,where buy and sell prices are communicated by op