Financial instruments 金融工具课件

3.FINANCIALMARKETS

ANDINSTRUMENTSFinancialmarkets&instrumentsBusinessesraisemoneytofinancecurrentoperationsaswellasforfuturegrowthMoneyisraisedInfinancialmarkets(capitalmarketsandmoneymarkets)Byissuingfinancialinstruments(alsocalledsecurities)whichgivetheholdersclaimsonfuturecashflowsofthebusiness2FinancialmarketsFinancialmarketsdescribesthedistributionsystembywhichcash-deficitentitiesengageintransactionswithcash-surplusentities.Besidesbusinesses,participantsincludegovernmentagencies,pensionfunds,endowments,individuals,commercialbanks,insurancecompanies…RegulatedbySecurities&ExchangeCommissionCapitalmarketsdealwithlongterminstrumentslikestocksandbondswhilemoneymarketsdealwithshort-terminstrumentswithmaturitylessthanoneyearsuchascommercialpaper.3TypesofinstrumentsDebtinstrumentsofferfixedclaims.Equityoffersresidualclaims.Hybridssuchasconvertibledebtcombineboth.Derivativessuchasforwards,futuresandoptionsprovideahedgeagainstrisk5BondcharacteristicsParvalueMaturitydateCouponrateCurrentyieldvs.yieldtomaturity(YTM)SinkingfundforperiodicrepaymentofprincipalVariableratevs.fixedratebonds7CallProvisions提前赎回条款Righttoretirebondspriortomaturity.Investorsrequireapremiumforcallprovisions.Callpriceistypicallyamodestpremiumabovepar.Delayedcallpreventsretirementbeforesomedate.Calloptionshelpcompaniestakeadvantageofdeclinesininterestratesandrearrangecapitalstructure8RightsinLiquidation清偿权利RightsofabsolutepriorityGovernmentinrespecttotaxespastdueSeniorcreditorsGeneralcreditorsSubordinatedcreditorsPreferredshareholdersCommonshareholders10SecuredCreditorsSecuredcreditinvolvescollateral.Inliquidation,proceedsfromthesaleofcollateralonlygotothesecuredcreditoruptotheamountofthesecuredcredit.Anyresidualgoesintothepoolsharedbytheotherinvestors.Ifthesaleofcollateralisinsufficient,thesecuredcreditorbecomesageneralcreditorforthebalance.11Bonds–investor’sperspectiveFixedincome,nocapitalappreciationConvertiblebondsseektoprovidebothRisk–returntradeoffLesserriskthanequity,lowerreturnsAnnualizedreturnsover10yrsforBarclaysBondIndex@7.6%vs.S&P500@10.4%AlsoreferTable5-1Realvs.nominalreturnsir=(1+in)/(1+p)-1whereir=Realreturn,in=Nominalreturn,p=Inflationrate

13TABLE5-1RateofReturnonSelectedU.S.Securities1900-200714JunkBondsInvestmentgradeis“BBB”andabove.Junkbondsarespeculativeorhighyieldbondsandarebelowinvestmentgrade.Junkbondmarketisanalternativetobankandinsurancecompanyloansforsmaller,lessprominentcompanies.Junkbondshavebeenusedtofinancemergersandacquisitions.16EQUITYorCOMMONSTOCKResidualincomesecuritiesRepresentownershipsecurities-proportionatetoshareholdingRighttocontrol-VotingrightsShareholdersarerepresentedthroughaboardofdirectors,throughwhichtheyexercisecontrol.Rightinliquidation–residualclaimoverassetsRiskierthandebtinstruments17Commonstock(contd)Advantagestoinvestor*Higherreturnsthandebt *Liquidity *WealthsharingDisadvantagestoinvestor*Higherrisk*Dividendpaymentnotmandatory19Commonstock(contd)Advantagestoissuer *Dividendpaymentnotmandatory *Noredemptioncashoutflows *Higherequitymeansbetterborrowingability Disadvantages*Costliersourceoffundsthandebt*Dilutionincontrol*Dividendsnottaxdeductible(unlikeinterest)20Anoteonretainedearnings……Readilyavailablesourceoffundsinternally(internalequity)NoissuecostsNodilutionincontrolReflectstherobustnessofcompany’shealthandreducesdependanceonoutsidefundingTheonlypointtoberememberedisthatretainedearningsalsohasacostintermsofopportunitycosttoinvestors21HigherpriorityovercommonstockholdersinpaymentofdividendsandinrepaymentofcapitalAnnualfixeddividendatcouponratexparvalueDividendisdiscretionaryCumulativedividendsfeatureDividendnottaxdeductibleforissuerNovotingrightsexceptinmatterswhichconcernthemPREFERREDSTOCK22MARKETCHANNELSMarketChannelsforraisingfundsPrivateequityVenturecapitalInitialpublicoffers(IPOs)andseasonedequityissues(SEOs)ShelfregistrationPrivateplacementInternationalmarkets24PrivateEquityFinancingSourceoffundsforstartups,neworsmallbusinessesviewedastooriskyforbanklendingandtoosmalltoattracttheattentionofinvestorsinpublicmarkets.Fundingdonebystrategicinvestors,venturecapitalfirmswhoprovideseedmoneywithpotentialacquisitionontheirminds.25PrivateEquityPartnershipsStructuredaslimitedpartnershipswithaspecifieddurationsuchas10years.Generalpartneristheprivateequityfirm,whichraisesapoolofmoneyfromlimitedpartners,suchasinstitutionalinvestorsandinsurancecompanies.Limitedpartnershavelimitedliability.Typicalfeestructureis2and20,thesumofamanagementfeeand‘carriedinterest’basedoncapitalappreciation.Inducemanagerstocreatevalueoverlongrun26

VenturecapitalAventurecapitalcompanyisafinancinginstitutionwhichjoinsanentrepreneurasaco-promoterinaprojectandsharestherisksandrewardsoftheenterprise.Projectsaregenerallyhighriskwithpotentialhighrewards.Soughtbynew/untriedbusinesseshavinglittle/noaccesstopubliccapital/bankloans.27ExitrouteGoingpublicSaleofsharestopromoter.Saleofcompanytoanothercompany–managementbuyinorbuyout.Sellingtoanewinvestor.Liquidation29FIGURE5-3VentureCapitalInvestmentinU.S.Companies30InitialPublicOfferings(IPOs)WhencompaniesraisecapitalforthefirsttimebyissuingnewsharesSeasonedequityofferings(SEOs)refertoissueofnewsharesbyacompanythatisalreadypubliclytraded(alreadymadeanIPO)Companyassessesproposalsfrominvestmentbanksandchoosesone–‘managingunderwriter’31IPORisksManagingunderwriteradvisesthecompanyonsecuritydesignregisterstheissuewiththeSEC(30-90days)orchestratesa“roadshow”assemblesanunderwritingsyndicatewhoengageinbookbuildingSyndicateactsaswholesaler.Offerpricesethoursbeforestockgoespublic.Companybearspriceriskduringtheregistrationprocess;syndicatebearsriskassociatedwithunsoldshares,whichtheycannotsellabovetheofferprice.32ShelfregistrationShelfregistrationisageneralpurposeregistrationgivingbroadtermsofthesecuritiestobeissued,gooduptotwoyears,thatallowsthefirmtogetquickapprovalAsingleunderwriteroftenbuystheentireissue.CutsthetimelagfromseveralmonthstoafewdaysCompetitivebidslowertheissuecosts.33PrivatePlacementCorporationscanavoidregisteringwithSECbyplacingthesecuritiesprivatelywithinstitutionalinvestors.Theprivateplacementmarketisabouthalfthesizeofthepublicmarket,excludingbankloans.Attractiveoptionifpublicinvestorsnotespeciallyreceptiveforreasonsofcomplexity.Advantagestocompanyarequickerandeasiertonegotiate,canbecustomtailoredtospecificneedsDisadvantageisthatasunregisteredsecuritiestheycannotbetradedonfinancialmarkets–lessliquidRule144Anowallowsfortradingofprivatelyplacedsecuritiesamonginstitutionalinvestors.34IssueCostsForprivatelynegotiatedtransactions,issuecostamountstotheinvestmentbankingfee.Forpublicissues,therearealsolegal,accounting,andprintingfees.Costcomparisons2.2%forstraightdebt.3.8%forconvertiblebonds.7.1%forsecondaryofferings.11%forIPOs.35ComparisonIPOPvt.PlmntCapitalraisedHighLesserDistributionWidelydistributedLimitedDilutionofControlHighLowerFloatationcost&timeHighLower36EfficientMarketsIssuesinraisingnewcapitalTimingPricingMarketefficiencyiswithreferencetohowquicklypricesincompetitivemarketsrespondtonewinformationEfficientmarketisonewherepricesadjustrapidlytonewinformationandcurrentpricesfullyreflectavailableinformation37EfficiencyinDegreesAmarketisweak-formefficientwhenpricesfullyreflectallinformationaboutpastpricesSemi-strongformefficientwhenpricesfullyreflectallpubliclyavailableinformationstrongformefficientwhenpricesfullyreflectallinformation,publicorprivate.38Empiricalevidence-implicationMarketsarenotstrongformefficient.Withlimitedexceptions,marketsaresemi-strongformefficientandhencePubliclyavailableinformationhasnopredictivepowerinrespecttomarketprices.Typicalinvestorsshouldnotexpecttoearnabnormalreturnstradingonpubliclyavailableinformation.Itispointlesstotimethepurchaseorsaleofthefirm’ssecurities.39ConclusionstoDrawApartfrommarketsentiment,managerscanuseprivateinformationabouttheirowncompaniesinmakingtimingdecisions.PricingdecisionsinpracticearebasedonMarketvalueFairvaluePricediscoverythrobookbuilding40ManagingRiskRiskisdefinedasthevariabilityofreturnsfromtheexpectedvaluesInfinancialmarketsvolatilityresultsinriskCompaniesusederivativestomanageriskandincentivizemanagers.Derivativesincludeforwards,futures,optionsSocalledastheirvalueisderivedfromthatoftheunderlyingassetswhichcouldbeshares/currency/commodities41ForwardcontractsYoucanbuyinspotmarkettodayforimmediatedelivery–spotcontract.Youcancontracttodayatapredeterminedpriceforfuturedelivery–forwardcontract.Bylockinginapricetoday,youcanavoidpriceriskAnexporterwith€1millionreceivablein90days,cansell€(animporterwithapayablecanbuy€)atapredeterminedrateintheforwardmarketFuturescontractsaresimilartoforwardsexceptthattheyareexchangetraded(whi