MGF402_Chap01_01242011

MGF402_Chap01_01242011 - 01/24/2010 Class Review •...

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Unformatted text preview: 01/24/2010 Class Review • Participants – Financial intermediaries • Examples – How do they work to connect the investors and the investment opportunities? • Investment companies – – – Pooling Designing Analyzing 01/24/2010 Class Review • Participants – Investment bankers • Core business: underwriting • Role in an IPO process – – – Advising/Filing Marketing/Collecting information from road show Sometimes the Market Maker after the security is publicly traded • Investment banking and commercial banking 01/24/2010 Class Review • Financial Markets – Types of markets • Different assets • Exchanges vs. OTC – Role • • • • • Pricing Timing Risk Ownership Governance 01/24/2010 Class Review • Financial Markets – Competition • Financial markets are highly competitive. • Competition No free lunch proposition – – Implication 1: risk and return trade-off Implication 2: efficient market hypothesis; and the near efficient market 01/24/2010 Class Review future profit Investors current saved $ investment portfolio Financial intermediaries (e.g. investment companies) • existing stocks, bonds $ $ new issues (stocks or bonds) • derivatives $ Other investors Investment bankers new - Individuals $ new issues issues - Firms Firms - Institutional investors real assets $ - Other investment firms - Other firms - Suppliers; employees ...
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