Securities markets

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Securities markets

  1. 1. Securities markets
  2. 2. Importance of FinancialMarkets Facilitate in raising funds Intermediary between savers and borrowers Absolutely vital for the proper functioning of capitalistic economies.
  3. 3. The Primary Market The market for new issues of securities, typically involving investment bankers. Initial Public Offering (IPO)  Common stock of a company being sold for the first time Investment Banker  Firm specializing in the sale of new securities to public, typically be underwriting the issue.
  4. 4. The Primary Market (Cont’d) Underwriting  The process by which investment bankers purchase an issue of securities from a firm and resell it to the public. Prospectus  It provides information about an initial public offering of securities to potential buyers. Private Placements
  5. 5. A Primary Offering of Securities Issuer Originating investment bankerUnderwriting Syndicate (group) of investment bankers Selling group composed of underwriting syndicate plus any selected retail brokerage houses Investors
  6. 6. The Secondary Markets Where existing securities are traded among investors Broker  An intermediary who represents buyers and sellers in securities transactions and receives a commission Bid Quote  The price at which a dealer offers to buy
  7. 7. The Secondary Markets(Cont’d) Ask Quote  The price at which a dealer offers to buy shares  Bid price Rs.245.80  Ask price Rs.245.85 Blocks  Transactions involving at least 10,000 shares
  8. 8. The Secondary Markets(Cont’d) Dealer Over the counter market Blue chips
  9. 9. Stock Market Index DJIA KSE 100 Index LSE Index BR 30 Index S&P 500

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