1. Securities markets

2. Importance of Financial
Markets
 Facilitate in raising funds
 Intermediary between savers and
borrowers
 Absolutely vital for the proper
functioning of capitalistic economies.

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. 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. A Primary Offering of Securities
Issuer
Originating investment banker
Underwriting Syndicate (group) of investment bankers
Selling group composed of underwriting syndicate
plus any selected retail brokerage houses
Investors

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. 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. The Secondary Markets
(Cont’d)
 Dealer
 Over the counter market
 Blue chips

9. Stock Market Index
 DJIA
 KSE 100 Index
 LSE Index
 BR 30 Index
 S&P 500