资本市场和金融机构.ppt

1,CAPITAL MARKETS AND FINANCIAL INSTITUTIONS (BUS 498),By ARTURO RUBALCAVA,2,This course examines: The way in which Financial Markets function The pivotal role played by Financial institutions Main emphasis: Coverage of Canadian markets and institutions Coverage of risk measurement and management Risk-return tradeoffs available to investors.,3,Introduction,Financial System Financial Markets Financial Institutions Economic functions of FIs Financial Innovation Regulation of the Financial System Conclusions,4,1. Financial System,Its main role is to gather money from parties that have more money than they need right now and route those funds to those that can use them for either business or consumer expenditures. This is facilitated by Financial Markets and Financial Institutions,5,2. Financial Markets Markets where parties buy and sell financial instruments including stocks, bonds, options, foreign exchange contracts. Example: BCE needs to finance a $400 million telecom project. It can get the money via: A) Financial Markets by borrowing directly from investors (e.g.,households) B) By borrowing indirectly from households via a Financial Intermediary (e.g., a commercial bank).,Households,Nortel,$,$,Bonds,Bonds,Financial Markets,A),6,Financial markets: Classification Money Market. Short term debt instruments Maturity of securities 1 year Debt Markets (Government Securities Market, Municipal Bond Markets, Corporate Debt Markets) Stock Market (TSX), Depositary Receipts Market Foreign Exchange markets. Markets in which foreign currencies are traded Other Markets: Financial Derivative Markets,7,Financial Markets: Alternative classification Primary Market. Market for new issue of securities sold to initial buyers by investment bankers. Secondary Market. Market in which already-issued securities are traded among investors Brokers. Match buyers and sellers for a fee. Dealers. Sell and buy securities from buyers and sellers.,8,Types of secondary markets,1. Exchange Market Transaction are centralized in a physical location via communication network. Examples: TSX, TSX Venture Exchange (formerly CDNX), Montreal Exchange, Winnipeg Commodities Exchange, NYSE, AMEX. 2. Over-the-counter Market: Transaction made through communications network with no physical centralization of trades Examples: CDN, (Canadian government bonds), NASDAQ. Foreign exchange market,9,Domestic and International Financial Markets,Domestic Market Banks Money Market Bond Market Stock Market International Market International Bond Market Foreign Bonds Eurobonds Eurocurrencies Foreign stock markets,10,International Bond Market A) Foreign Bonds A bond issued by a foreign firm or government for sale in another country in the currency of that country. Example? Yankee bonds. U.S. dollar denominated bonds issued within the U.S. by a foreign borrower (e.g. Bombardier). Others: Samurai bonds, Bulldogs B) Eurobond Market: Eurobonds A bond issued by a foreign firm or government for sale outside the country in whose currency it is denominated. Example? A Canadian dollar-denominated bond for sale to investors outside of Canada.,11,c) Eurocurrency market: Eurocurrencies International currencies that are deposited in banks outside their home countries. Examples: Eurodollars. A US dollar deposited in a bank outside the US. Other examples: Euroeuros, Euroyens, etc. International Bank Loans and Syndicate Credits: Ex. Loans in Eurocurrency (Eurocredits) Foreign Stock Markets E.g., Shares of Potash Corp. are listed on the TSX, and NYSE.,12,Reasons of the significant growth in foreign financial Markets,Deregulation of financial markets Globalization of trade Easy accessibility of information via advances in computer technology,13,Financial Markets (Continued),How borrowers obtain funds? Money Market.- Short term debt Capital Markets.- Long term debt and equity When to finance in the Money Mkt? When in the Capital Mkt? When to finance with Long Term Debt? When with Equity? What type of firms will finance more with equity than with debt? When to finance in the domestic or in international markets? Advantages for lenders Debt vs. Equity,14,3. Financial Institutions (FIs),The flow of funds from lenders to borrowers is facilitated by Financial Institutions This can be done A) Directly In the financial markets through the assistance of securities firms (investment banks). B) Indirectly Through Other financial intermediaries (e.g., via a commercial bank).,A) Direct Finance,Process by which funds move directly from lenders to borrowers assisted by an investment bank. It does not imply an asset asset transformation function. For example: Research in motion issues $1-billion of stock directly to investors with the assistance of CIBC World Markets (investment bank) Once the financial claims have been issued, they may be resold to other investors also by Investment banks through their brokerage or dealer units.,16,B) INDIRECT FINANCE,Process by which funds move from lenders to borrowers by a financial intermediary that smoothes the flow of funds between the lender-savers and the borrower-spenders. It implies an asset asset/risk transformation function. For example: BCE gets a loan for $400-million from Bank of Montreal. Households instead of lending $400-million directly to Nortel, they prefer to lend $400-million to Bank of Montreal (for example, by investing in short-term deposits with a guaranteed interest rate). Bank of Montreal makes a $400-million long-term loan to BCE. Primary route for moving funds from lenders to borrowers,17,The Financial System,.,Financial Institutions,Financial Markets,Lender-Savers 1. Households 2. Business Firms 3. Governments 4. Foreigners 5. FIs,Borrower Spenders 1. Business Firms 2. Government 3. Households 4. Foreigners 5. FIs,DIRECT FINANCE (Assisted by Securities firms),INDIRECT FINANCE,Funds (e.g., deposits),Funds (e.g., loans),Funds,Funds,Funds (e.g., Govt bonds),(e.g., shares),(e.g., shares),18,Financial Intermediaries,A) Depository Institutions. FIs that take deposits and make loans Chartered (commercial) banks and near banks (trust and mortgage loan companies, and credit unions) M