Chapter 5 ORGANIZATION OF THE FINANCIAL MARKETS
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Chapter 5 ORGANIZATION OF THE FINANCIAL MARKETS

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Chapter 5 ORGANIZATION OF THE FINANCIAL MARKETS Presentation Transcript

  • 1. Chapter 5 ORGANIZATION OF THE FINANCIAL MARKETS
    • What are the different types of financial markets?
    • How do the primary financial markets function?
    • Why are secondary financial markets important?
    • How are the secondary financial markets organized?
    • How are financial markets evolving ?
  • 2. What is a financial market
    • A general definition
    • Characteristics of a good market
    • Liquidity
    • Sufficient information is available
    • Trading takes place in full view of all participants
  • 3. What is a financial market – Cont.
    • Price continuity
    • Low transactions costs
    • Equal access to the market
    • Price adjust quickly to new information
  • 4. Classification of financial markets
    • Primary and secondary markets
    • Money and capital markets
    • Debt and equity markets
    • Organized versus over-the-counter markets
    • Global versus regional markets
  • 5. Primary financial markets
    • Open auctions
    • US Treasury security auctions
    • Federal agency security auctions
    • Mortgage backed security auctions
  • 6. Figure 5.1 – Example of an IPO
  • 7. Underwriting and investment banking
    • Role of the investment banker
    • The underwriting process
    • Underwriting discount
    • Competitive versus negotiated arrangements
    • Syndication
    • Private placements
  • 8. The importance of secondary markets
    • Liquidity
    • Price discovery
    • Why some securities develop better secondary markets than others
    • Bid-ask spread as an indication of the depth of the market
    • Trading volume
    • Size of the issue
  • 9. Secondary bond markets
    • U.S. government securities
    • Municipal bonds
    • Corporate debt securities
    • International bond markets
  • 10. Domestic stock markets
    • Distribution of trading activity
    • NYSE – largest by dollar value of shares traded
    • Nasdaq – largest by number of shares traded
    • Stock market indexes
  • 11. The New York Stock Exchange
    • Listing requirements
    • Trading practices
    • Auction market
    • The role of the specialist
  • 12. The Nasdaq stock market
    • Listing requirements
    • Trading practices
    • Electronic market
    • Role of the market maker
  • 13. Other domestic stock markets
    • The American Stock Exchange
    • Regional exchanges
    • Third and fourth markets
    • Third market
    • Fourth market
    • Electronic Communications Network (ECN)
    • In house networks
  • 14. International stock markets
    • The London Stock Exchange
    • The Tokyo Stock Exchange
    • Emerging markets
  • 15. Figure 5.2 – Growth in Trading Volume in International Stock Issues on the London Stock Exchange
  • 16. Figure 5.3 – Month-to-Month Volatility in the Brazilian Stock Market Index
  • 17. The future of the financial markets
    • Growing importance of institutional investors
    • Globalization
    • Advances in technology
    • Will 24 hour trading every become a reality?