NT_tema_9_English - Module 9. Variable Income Learning...

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Unformatted text preview: Module 9. Variable Income Learning Goals To know the instruments and the issue process. To interpret a Variable Income market according to their phases and characteristics. To understand and interpret the fundamental role that each of these characteristics plays in proper pricing, and therefore in the efficient allocation of resources. To define the criteria that allow us to critically evaluate the different structures of Variable Income markets. Context The savings bank where you work carries out a range of activities including stockbroking. However, the Board of Directors thinks that the broking business has peaked, and has decided to carry out a major strategic expansion. Given that there are no legal barriers (MiFID), the savings bank has decided to offer Stock Exchange services. Your boss wants you as head of the project. They are aware that there are different ways of carrying out the project successfully, and that one of the keys to success is the appropriate design of the market structure, and they are interested particularly in understanding what types of market structure they can implement. They know that there are two basic market models: Price-driven and orders- driven, but that nowadays no market is purely one type or another. Your work must focus on providing them detailed information on different market systems and advise them on the market structure best suited to expanding their business. Overview 1. Introduction 2. Pricing 3. Primary Market 4. Secondary market a. Key characteristics b. Types of orders c. Open Market d. Suspended Market 1 5. Stockmarket Indices Evaluation Perform the exercises 2 1. Introduction The Stock Exchange is a financial market where savers and lenders meet, thus contributing to the growth of an economy, since this is a means of channelling savings toward productive investment. The Stock Exchange is therefore a financing instrument for companies and an investment instrument for savers. Two important characteristics: The Stock Exchange provides buyers of securities the option to convert them into cash whenever they want (liquidity). In addition, the stock market is increasingly efficient at resolving the problem of valuing financial instruments through free establishment of prices under transparent conditions. The instruments used for the financing companies are shares. Shares are ownership certificates that represent one of the equally divided shares in the capital of a company. The concept of value in references to shares is subjective, and can have different meanings in different contexts. Nominal value: historical value at which the securities were formerly issued (in Spain it was usually 500 or 1,000 Pesetas, is currently 1 , and in the U.S. it has traditionally been $1). Its purpose is to establish and fill the capital account....
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NT_tema_9_English - Module 9. Variable Income Learning...

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