secmarkets - 1 Securities Markets Economics 71a Spring 2007...

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Unformatted text preview: 1 Securities Markets Economics 71a Spring 2007 Mayo, Chapter 3 Lecture notes 2.3 Outline Markets Orders Positions Information Markets Primary markets New issues (IPO s, corporate and public debt) Secondary markets Trading old stuff In many cases most activity in secondary Money and Capital Markets Money markets Short term securities (1 year or less) Capital markets Longer term 2 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 $11 in future No interest payments Capital Market Securities Bonds (longer term borrowing) U.S. Treasury Municipal (tax free) Corporate More later Capital Market Securities Stocks Common stock Preferred stock International More later Trading and Secondary Markets Stock markets Bond markets Derivatives Foreign Exchange 3 U.S. Stock Markets New York Stock Exchange (NYSE) National Association of Securities Dealers Automated Quotation (Nasdaq) American Stock Exchange (AMEX) Continuous Trading Market types Spet Electronic dealer Open outcry Over the counter NASDAQ Upstairs (negotiated) ECN (electronic crossing network) ECN s: Electronic Crossing Networks Internet based trade networks Customers can meet directly (no broker) Used mostly by professional money managers Advantage: fewer intermediaries Disadvantage: less liquidity (Fewer people to trade with) Fastest growing markets Other Markets Futures/Options Foreign Exchange Spot versus forward Bond 4 International Markets Many major international stock markets London Tokyo China many more US accounts for only 36% of the companies listed on stock markets around the world International Investments Purchase stocks or bonds in foreign countries Purchase shares in foreign Frms in U.S. (American Depository Receipts) ($/English) Bonds can be issued in different currencies Eurobond: Intel issues $ denominated bond in Japan Trading Hours Most U.S. stock markets 9:30-4:00 Extended hours on electronic trading networks After hours trading International markets (local times) oreign exchange markets (24 hours) Hours increasing : toward a 24 hour market Outline Markets Orders Positions Information 5...
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This note was uploaded on 01/02/2012 for the course FINANCE 347 taught by Professor Bayou during the Fall '11 term at NYU.

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secmarkets - 1 Securities Markets Economics 71a Spring 2007...

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