《Economics from Miss Chen》Chp8.ppt

1、Chapter 8 The Stock Market,Information:Evolution of the Stock Market,Origin 17th century London Coffee houses Purpose To form joint-stock companies to undertake risky trading ventures. Stock Exchanges and Future Markets Board to Boardless Stock Exchange 24-hour world stock market,8.1 ELEMENTS OF THE

2、 STOCK MARKET,Security a piece of paper in which an organization, either business or government, acknowledge a financial obligation. Bond securities issued to the lenders with large numbers sums of money by some organization, such as the government. Security Market where the holders of securities ca

3、n buy and sell,Stocks Category,Definition the shares in proportion to contribution to the company with vote. Ordinary shares where the shareholders bear the ultimate risk of loss should the company fail, they have no preferential right to the return of their funds. Preference shares the shareholders

4、 have fixed payment (not fluctuating with the good or bad performance of the company), and have a preference over the ordinary shareholders. when liquidation, the shareholders have preference with regard to repayment of capital. without votes, the shareholders cannot take part in the operation of th

5、e company Comparison preference shares is less risky than ordinary shares, with limited participation in the profit and decision making.,Stocks Value,Par value the amount price recorded on the shares. Market value Issue price what shareholders pay when the shares are first offered to investors. Exch

6、ange price A.B.H.N.S. Blue chip Red chip,8.2 THE ROLE OF THE AUSTRALIAN STOCK EXCHANGE,Stock Exchange offers several import benefits: Liquidity shareholders can generally convert their shares to cash at short notice in the ongoing market. Valuation value ones holdings of shares almost on a second by

7、 second basis. Protection ensure a high standard of business behavior on the part of the management of listed companies. Secondary Market (circulating market) where the issued shares can be conveyed. Primary Market (new issue market) which raises the new long-term debt (borrowing) and equity (ordina

8、ry share capital) issued by both business and government.,8.3 HOW THE ASX WORKS,8.3.1 Trading Stockbroking firm instruction of which shares, numbers, price Past face-to-face system of a board on the wall of the trading floor SEATS Stock Exchange Automated Trading System computer network linking stoc

9、kbrokers offices stockbrokers enter buy and sell orders into the system, monitor the market from moment to moment. a specific market a network of screen,8.3.2 Share Transfer “CHESS”,Past the seller required to surrender the share certificate to the broker for submission to the companys share transfe

10、r secretary, who would then issue a new document to the buyer. CHESS Clearing House Electronic Subregister System it keeps a record of share transactions and shareholders for approved Stock Exchange listed companies, reducing the amount of paperwork and speeding up the process.,8.3.3 Derivatives,Der

11、ivative a security which is based upon, or derived from, another security. Options an agreement between two parties where one party gives the other the right, but not the obligation, to buy or sell an instrument, such as a particular share, under certain conditions. Futures a future contract is a st

12、andardized agreement to buy or sell a specific commodity or security at a specific time and place in the future, at a price established through open outcry in a central, regulated marketplace.,Option,Kinds of Periods American Option: some time in the future European Option: some day in the future Sp

13、ecification buyer, seller, price, quantity, term Category Call Option it gives the holder the right to call for, or buy, a certain number of shares at a predetermined price. bull: someone expects share prices to rise Put Option it gives the holder the right to sell a specified number of shares at a

14、predetermined price. bear: someone expects share prices to bear Stag someone who buys a new issue of shares with the intention of selling as soon as shares come onto the market. (Premium),Future,Function avoid market risk (transfer price risk) find the reasonable price Hedge the value buy/sell the g

15、oods on the spot market, at the same time, sell/buy the same amount similar ones on the future market. when the price is fluctuant, loss on one market can be compensated by the profit on another market.,Hedge the Value,Future Gambling,8.4 MARKET INFORMATION,Market Index a weighted average of the pri

16、ces of the shares which the index is based. a measure of the general direction of the market. Market Capitalization Weighted the number of shares issued by a particular company enter into the calculation. Information ,8.5 WHO OWNS SHARES?,a board of directors run the concern on behalf of the shareho

17、lders as the government of the company managing director / chief executive officer assume responsibility for the daily operation of the firm executive directors: senior managers outside directors with no day-to-day involvement elected to bring an independent perspective to the business,Challenging t

18、he traditional legal view,boards of directors in large companies are elected by only a small percentage of shareholders. Reason most shareholders hold only a tiny interest in the firm they can sell their shares on the stock exchange if they did not like whats happening.,8.6 MARKET EFFICIENCY,efficient-market hypothesis share prices fully reflect all information which is relevant to