secmarkets - Securities Markets Economics 71a Spring 2007...

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Securities Markets Economics 71a Spring 2007 Mayo, Chapter 3 Lecture notes 2.3
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Outline Markets Orders Positions Information
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Markets Primary markets New issues (IPO’s, corporate and public debt) Secondary markets Trading old stuff In many cases most activity in secondary
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Money and Capital Markets Money markets Short term securities (1 year or less) Capital markets Longer term
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Money Market Securities Treasury bills U.S. government debt Short term (less than 1 year) Commercial paper Short term corporate borrowing Discount pricing Buy for $10, get paid $11 in future No interest payments
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Capital Market Securities Bonds (longer term borrowing) U.S. Treasury Municipal (tax free) Corporate More later
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Capital Market Securities Stocks Common stock Preferred stock International More later
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Trading and Secondary Markets Stock markets Bond markets Derivatives Foreign Exchange
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U.S. Stock Markets New York Stock Exchange (NYSE) National Association of Securities Dealers Automated Quotation (Nasdaq) American Stock Exchange (AMEX)
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Continuous Trading Market types Specialist Electronic dealer Open outcry Over the counter NASDAQ Upstairs (negotiated) ECN (electronic crossing network)
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ECN’s: Electronic Crossing Networks Internet based trade networks Customers can meet directly (no broker) Used mostly by professional money managers Advantage: fewer intermediaries Disadvantage: less liquidity (Fewer people to trade with) Fastest growing markets
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Other Markets Futures/Options Foreign Exchange Spot versus forward Bond
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International Markets Many major international stock markets London Tokyo China many more US accounts for only 36% of the companies listed on stock markets around the world
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International Investments Purchase stocks or bonds in foreign countries Purchase shares in foreign firms in U.S. (American Depository Receipts) ($/English) Bonds can be issued in different currencies Eurobond: Intel issues $ denominated bond in Japan
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Trading Hours Most U.S. stock markets 9:30-4:00 Extended hours on electronic trading networks “After hours trading” International markets (local times) Foreign exchange markets (24 hours) Hours increasing : toward a 24 hour market
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Outline Markets Orders Positions Information
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Types of Orders Market order Limit order
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Market Order Buy or sell at the current market price No restrictions “Buy 50 shares at market”
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This document was uploaded on 11/04/2011 for the course FIN 412 at North South University.

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secmarkets - Securities Markets Economics 71a Spring 2007...

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