导图社区 FIN206-Securities Markets
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编辑于2022-02-27 19:18:05FIN206-Securities Markets
Lecture1-Asset Classes and Money Market
Real versus Financial Assets
Real assets: Assets used to produce goods and services.
Financial assets: Claims(债权) on real assets or the income generated by them.
Financial Asset Classes
Fixed-income (debt) securities(固定收益证券,债券): Pay a specified cash flow over a specific period
Money Markets
Capital Markets
Equity(股本): An ownership share in a corporation
Derivatives(衍生证券): Securities providing payoffs that depend on the values of other assets
The Players ( The participants in market)
Business Firms (net borrowers): Raise capital now to pay for investments
Households (net savers): Purchase securities issued by firms
Governments (can be both borrowers and savers): Depends on the relationship between tax revenue and government expenditures
Financial Intermediaries( Connectors of borrowers and lenders)
Commercial banks
Investment companies
Insurance companies
Pension funds
Hedge funds
Investment Bankers
Specialize in primary market transactions
Primary market (firms go IPO)
Newly issued securities offered to public
Investment banker“underwrites”(承销) issue
Secondary market
Preexisting securities(既有的) traded among investors
Financial Assets = Financial Liabilities
Financial Assets and Liabilities must balance
Aggregated balance sheets → only real assets remain
Domestic Net Worth = Sum of real assets
The Investment Process
Asset Allocation
Primary determinant of a portfolio's return
Percentage of fund in asset classes, e.g. equity、 bonds、bills
Top Down Investment Strategies starts with Asset Allocation
Security Selection
Choice of particular securities within asset class
Bottom up Investment strategies starts with security selection
Security Analysis: Analysis of the value of securities
Markets Are Competitive
Risk-Return Trade-Off
Assets with higher expected returns have higher risk
Efficient Markets
Passive management
Buying and holding a diversified portfolio
No attempt to identify mispriced securities
Active management
Identify mispriced securities
or Forecast broad market trends (stock and bond market indices)
The Money Market
Subsector of the fixed-income market
Short-term
Highly liquid
Low risk
Often have large denominations
Investment through MMMF (Money Market Mutual Fonds)
* 了解谁是borrewer,谁是lender在 Money Market中的不同机构中
Treasury Bills (短期无息国库券,美)
issuer,发行者,就是borrower
in Money Market, use 360 days to calculate a year; in Bond Market, use 365 days
Certificates of Deposit (CDs)
Commercial Paper
Instruments
Bankers' Acceptances
Purchaser authorizes a bank to pay a seller for goods at later date (time draft)
When purchaser’s bank “accepts” draft, it becomes contingent liability of the bank (and marketable)
Eurodollars
Dollar-denominated time deposits held outside U.S.
Pay higher interest rate than U.S. deposits
Federal Funds
Trading in reserves held at the Federal Reserve
Key interest rate for economy
*Depository institutions must maintain deposits with Federal Reserve Bank
LIBOR (London Interbank Offer Rate)
Rate at which large banks in London (and elsewhere) lend to each other
Base rate for many loans and derivatives
Repurchase Agreements
Repurchase Agreements (RPs): borrow
Short-term sale of securities + promise to repurchase at higher price
RP is a collateralized loan
Many RPs are overnight
“Term” RPs may have a 1-month maturity
Reverse RPs: lending
Lending money; obtaining security title as collateral (抵押品)
Credit Crisis
MMMF and the Credit Crisis of 2008
2005-2008: Money market mutual funds (MMMFs) grew 88%
MMMFs had their own crisis in 2008: Lehman Brothers filed for bankruptcy protection on 15 Sep. 2008
Reserve Primary Fund (the oldest MMMF)“broke the buck”
U.S. Treasury temporarily offered to insure all money market funds