FINM1415期中冲刺班-final version.pdf - FINM1415 期中冲刺班 Tu t o r : 维 尼 Topic 1 建议 1 看 tutorial 答案 2 看 lecture slides

FINM1415期中冲刺班-final version.pdf - FINM1415...

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F I N M 1 4 1 5 期 中 冲 刺 班 T u t o r : 维 尼
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Topic 1 建议 1. tutorial 答案 2. lecture slides (结合 learning objectives 看)一切皆有可能出在 MCQ Direct financing versus indirect financing (i.e. intermediation) Direct financing 1) Definition: the transfer of funds from ultimate savers to ultimate borrowers without an intermediary 2) Advantages: better returns; cost savings Indirect financing 1) Definition: the transfer of funds from ultimate savers to ultimate borrowers with an intermediary (i.e. deposit-taking institutions) Primary markets versus secondary market Primary markets - Investors purchase financial securities from the original issuers Secondary market - Investors trade their securities with other investors Objectives of financial regulation 1. Systematic stability 2. Depositor protection 3. Social objectives 4. Consideration of compliance costs
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Debt Market Treasury Notes: a short-term (<12 months) debt Treasury Bonds: long term debt (>12 months) Zero coupon bonds (refer lecture 4): single cash payment at maturity Corporate bonds: being relevant to rating (e.g. AAA, AA, A, BBB etc.) Share Market Ordinary shares vs. preference shares (see lecture1 slides pp.41-42) 1. Preference shareholders receive dividends before ordinary shareholders receive any distribution. 2. If the company is bankruptcy, preference shareholders are paid out of residual assets before ordinary shareholders receive any payment. 3. Preference shareholders do NOT have voting right but ordinary shareholders do. Risk and Return Conclusion: high risk, then high return.
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