资本市场和金融机构(10).ppt

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1、CAPITAL MARKETS AND FINANCIAL INSTITUTIONS(BUS 498)ByARTURO RUBALCAVA1This course examines:lThe way in which Financial Markets function lThe pivotal role played by Financial institutions lMain emphasis:lCoverage of Canadian markets and institutions lCoverage of risk measurement and management lRisk-

2、return tradeoffs available to investors.2Introduction1.Financial System2.Financial Markets3.Financial Institutions4.Economic functions of FIs5.Financial Innovation6.Regulation of the Financial System7.Conclusions31.Financial SystemIts main role is to gather money from parties that have more money th

3、an they need right now and route those funds to those that can use them for either business or consumer expenditures.This is facilitated by Financial Markets and Financial Institutions42.Financial MarketsMarkets where parties buy and sell financial instruments including stocks,bonds,options,foreign

4、exchange contracts.Example:BCE needs to finance a$400 million telecom project.It can get the money via:A)Financial Markets by borrowing directly from investors(e.g.,households)B)By borrowing indirectly from households via a Financial Intermediary(e.g.,a commercial bank).Households Nortel$BondsBondsF

5、inancial MarketsA)5Financial markets:ClassificationlMoney Market.Short term debt instrumentslMaturity of securities 1 yearDebtDebt Markets(Government Securities Market,Municipal Bond Markets,Corporate Debt Markets)StockStock Market(TSX),Depositary Receipts MarketlForeign Exchange markets.lMarkets in

6、 which foreign currencies are tradedlOther Markets:Financial Derivative Markets6Financial Markets:Alternative classificationPrimary Market.Market for new issue of securities sold to initial buyers by investment bankers.Secondary Market.Market in which already-issued securities are traded among inves

7、tors lBrokers.Match buyers and sellers for a fee.lDealers.Sell and buy securities from buyers and sellers.7Types of secondary marketsl1.Exchange MarketlTransaction are centralized in a physical location via communication network.lExamples:TSX,TSX Venture Exchange(formerly CDNX),Montreal Exchange,Win

8、nipeg Commodities Exchange,NYSE,AMEX.l2.Over-the-counter Market:lTransaction made through communications network with no physical centralization of tradeslExamples:CDN,(Canadian government bonds),NASDAQ.Foreign exchange market8Domestic and International Financial MarketsDomestic MarketlBankslMoney M

9、arketlBond MarketlStock MarketInternational MarketlInternational Bond MarketlForeign BondslEurobondslEurocurrencieslForeign stock markets9International Bond Market A)Foreign BondsA bond issued by a foreign firm or government for sale in another country in the currency of that country.Example?Yankee

10、bonds.U.S.dollar denominated bonds issued within the U.S.by a foreign borrower(e.g.Bombardier).Others:Samurai bonds,Bulldogs B)Eurobond Market:EurobondsA bond issued by a foreign firm or government for sale outside the country in whose currency it is denominated.Example?A Canadian dollar-denominated

11、 bond for sale to investors outside of Canada.10c)Eurocurrency market:EurocurrenciesInternational currencies that are deposited in banks outside their home countries.Examples:Eurodollars.A US dollar deposited in a bank outside the US.Other examples:Euroeuros,Euroyens,etc.International Bank Loans and

12、 Syndicate Credits:Ex.Loans in Eurocurrency(Eurocredits)Foreign Stock Markets E.g.,Shares of Potash Corp.are listed on the TSX,and NYSE.11Reasons of the significant growth in foreign financial Markets1.Deregulation of financial markets2.Globalization of trade3.Easy accessibility of information via a

13、dvances in computer technology 12Financial Markets(Continued)How borrowers obtain funds?Money Market.-Short term debt Capital Markets.-Long term debt and equityWhen to finance in the Money Mkt?When in the Capital Mkt?When to finance with Long Term Debt?When with Equity?What type of firms will financ

14、e more with equity than with debt?When to finance in the domestic or in international markets?Advantages for lendersDebt vs.Equity133.Financial Institutions(FIs)The flow of funds from lenders to borrowers is facilitated by Financial InstitutionsThis can be done A)Directly lIn the financial markets t

15、hrough the assistance of securities firms(investment banks).B)Indirectly lThrough Other financial intermediaries(e.g.,via a commercial bank).14A)Direct FinanceProcess by which funds move directly from lenders to borrowers assisted by an investment bank.lIt does not imply an asset asset transformatio

16、n function.For example:Research in motion issues$1-billion of stock directly to investors with the assistance of CIBC World Markets(investment bank)Once the financial claims have been issued,they may be resold to other investors also by Investment banks through their brokerage or dealer units.15B)IN

17、DIRECT FINANCEB)INDIRECT FINANCEProcess by which funds move from lenders to borrowers by a financial intermediary that smoothes the flow of funds between the lender-savers and the borrower-spenders.lIt implies an asset asset/risk transformation function.For example:BCE gets a loan for$400-million fr

18、om Bank of Montreal.Households instead of lending$400-million directly to Nortel,they prefer to lend$400-million to Bank of Montreal(for example,by investing in short-term deposits with a guaranteed interest rate).Bank of Montreal makes a$400-million long-term loan to BCE.lPrimary route for moving f

19、unds from lenders to borrowers 16The Financial System.FinancialInstitutionsFinancialMarketsLender-Savers1.Households2.Business Firms3.Governments4.Foreigners5.FIsBorrower Spenders1.Business Firms2.Government3.Households4.Foreigners5.FIs DIRECT FINANCE(Assisted by Securities firms)INDIRECT FINANCEFun

20、ds(e.g.,deposits)Funds(e.g.,loans)FundsFundsFunds(e.g.,Govt bonds)(e.g.,shares)(e.g.,shares)17Financial IntermediariesA)Depository Institutions.FIs that take deposits and make loanslChartered(commercial)banks andl near banks(trust and mortgage loan companies,and credit unions)Main business.Take depo

21、sits(e.g.,demand deposits,short and long term deposits)that are used to provide loans(consumer,commercial,mortgage)18B:Non-Depository Institutionsl Contractual Savings Institutions.FIs that acquire funds at periodic intervals on a contractual basis.lLife Insurance companies.Life and health risk prot

22、ectionlP&C Insurance companies.Protection against theft,fire,accidents.lPension Funds.Provide retirement income lInvestment IntermediarieslMutual Funds.Diversified portfolios of securities at a low cost.lFinance Companies.Consumer and business loans (Do not take deposits)lSecurities Firms(Investment Dealers,Broker-Dealers,Investment Banks)19