"02_Capital Markets_handout-1

"02_Capital Markets_handout-1 - Capital Markets and...

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Unformatted text preview: Capital Markets and Securities Trading Readings: BKM, Chapter 2 and Chapter 3 Lecture 1: Introduction Review: • Financial markets are absolutely vital to the world (as we know it) • Financial markets give access to capital • Financial markets give opportunity to invest capital $ now later $ now later Focus of this class • Which assets to invest in?- Money Markets- Fixed Income- Equity….. • How do they differ?- Potential return- Riskiness of investments 1. Overview of Capital Markets: • How do financial asset returns compare? 1. Overview of Capital Markets: • Equity:- Future cash-flows are (typically) uncertain- Maturity is (typically) indefinite- High risk 2. Equity Markets: 2. Equity Markets: • Investing in Equity : go long (+) go short (-) directly: buy sell buy on margin short-sell indirectly: mutual funds, pension funds hedge funds • How do you buy a stock in a company?- Buy on the primary market: New issues to raise capital for firm: IPO (Initial Public Offering), SEO (S easoned Offering)- Buy on the secondary market: Existing owner sells to another party, does not raise capital for firm (i.e., firm not involved) 2. Equity Markets: • Buying in Secondary Markets - Organized Exchanges: … National (NYSE, AMEX) and Regional 2. Equity Markets: E xchange T otal V olum e (shares. bill.) T rading V alue ($ bill.) N ew Y ork N asdaq/A m ex P acific 133.475 163.912 3.018 $5,777.601 $4,481.723 $39.561 C hicago P hiladelphia B oston...
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This note was uploaded on 04/09/2011 for the course MGMT 411 taught by Professor Clarke during the Winter '09 term at Purdue.

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"02_Capital Markets_handout-1 - Capital Markets and...

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