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Transcript of Financial Markets
What is a market?
Different types of markets
What's essential ?
> 12 mth
Publicly Traded on Exchanges
NYSE / Euronext/London Stock Exchange
size = ~ $40 trillions
Why do we borrow money ?
Why do we lend money
How do you Invest Money?
Stocks (ownership of a company)
Common Stock (Voting rights/right to dividends qtrly payments/capital gains/preemptive rights/right to residual claims on assets
Preferred Stock (paid first in case of bankruptcy, pref stocks are usually more expensive/ensure payment of dividends)
Long term debt issued by a corporation or a government
Issued at Par Value
Coupon rate – interest payment as percentage of Par Value
Exchange Traded Funds (ETFs)
Features of stocks and mutual funds
Ownership in a market basket of stocks
You can buy and sell ETFs at any time of the day, unlike mutual funds
SEC in the US (Securities and Exchange Commission)
FSA mission split into Prudential Regulation Authority, Financial Conduct Authority, Bank Of England
Initial Public Offering (IPO) → difference public/private Equity, facebook
Secondary Market Security exchanges
3 main agencies: S&P (Standard&Poors), Fitch, Moody's
Conflict of interests ?
~12 mth Maturity
Exchange Traded Funds
First of all:
market confidence: maintaining confidence in the financial system;
financial stability: contributing to the protection and enhancement of stability of the UK financial system;
consumer protection: securing the appropriate degree of protection for consumers; and
reduction of financial crime: reducing the extent to which it is possible for a business carried on by a regulated person to be used for a purpose connected with financial crime.
S&P World Ratings
Size= ~ 90 trillions