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1、Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,CAPITAL MARKETS AND FINANCIAL INSTITUTIONS(BUS 498),By,ARTURO RUBALCAVA,1,This course examines:,The way in which,Financial Markets function,The pivotal role played by,Financial insti
2、tutions,Main emphasis:,Coverage of,Canadian markets,and,institutions,Coverage of,risk measurement and management,Risk-return tradeoffs,available to investors.,2,Introduction,Financial System,Financial Markets,Financial Institutions,Economic functions of,FIs,Financial Innovation,Regulation of the Fin
3、ancial System,Conclusions,3,1.Financial System,Its main role is to gather money from parties that have more money than 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 Institution
4、s,4,2.Financial Markets,Markets,where parties buy and sell,financial instruments,including,stocks,bonds,options,foreign exchange contracts.,Example:BCE needs to finance a$400 million telecom project.It can get the money via:,A)Financial Markets by borrowing,directly,from investors(e.g.,households),B
5、)By borrowing,indirectly,from households via a Financial Intermediary(e.g.,a commercial bank).,Household,s,Nortel,$,$,Bonds,Bonds,Financial,Markets,A),5,Financial markets:,Classification,Money Market.Short term debt instruments,Maturity of securities 1 year,Debt,Markets(Government Securities Market,
6、Municipal Bond Markets,Corporate Debt Markets),Stock,Market(TSX),Depositary Receipts Market,Foreign Exchange markets.,Markets in which foreign currencies are traded,Other Markets:Financial Derivative Markets,6,Financial Markets:Alternative classification,Primary Market.,Market for,new,issue,of secur
7、ities sold to initial buyers by investment bankers.,Secondary Market.,Market in which,already-issued,securities are traded among investors,Brokers.,Match buyers and sellers for a fee.,Dealers.,Sell and buy securities from buyers and sellers.,7,Types of secondary markets,1.Exchange Market,Transaction
8、 are centralized in a,physical,location via communication network.,Examples:TSX,TSX Venture Exchange(formerly CDNX),Montreal Exchange,Winnipeg Commodities Exchange,NYSE,AMEX.,2.Over-the-counter Market:,Transaction made through communications network with,no physical,centralization of trades,Examples
9、:CDN,(Canadian government bonds),NASDAQ.Foreign exchange market,8,Domestic and International Financial Markets,Domestic Market,Banks,Money Market,Bond Market,Stock Market,International Market,International Bond Market,Foreign Bonds,Eurobonds,Eurocurrencies,Foreign stock markets,9,International Bond
10、Market,A)Foreign Bonds,A bond issued by a foreign firm or government for sale in another country in the currency of that country.,Example?,Yankee 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:Eurobond
11、s,A bond issued by a foreign firm or government for sale outside the country in whose currency it is denominated.,Example?A Canadian dollar-denominated bond for sale to investors outside of Canada.,10,c)Eurocurrency market:Eurocurrencies,International currencies that are deposited in banks outside t
12、heir home countries.,Examples:Eurodollars.A US dollar deposited in a bank outside the US.Other examples:,Euroeuros,Euroyens,etc.,International Bank Loans and Syndicate Credits:Ex.Loans in Eurocurrency(,Eurocredits,),Foreign Stock Markets,E.g.,Shares of Potash Corp.are listed on the TSX,and NYSE.,11,
13、Reasons of the significant growth in foreign financial Markets,Deregulation of financial markets,Globalization of trade,Easy accessibility of information via advances in computer technology,12,Financial Markets,(Continued),How borrowers obtain funds?,Money Market.-Short term debt,Capital Markets.-Lo
14、ng term debt and equity,When 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 finance more with equity than with debt?When to finance in the domestic or in international markets?,Advantages for lenders,Debt vs.Equity
15、,13,3.Financial Institutions(,FIs,),The,flow of funds,from lenders to borrowers is facilitated by Financial Institutions,This can be done,A)Directly,In the financial markets through the assistance of securities firms(investment banks).,B)Indirectly,Through,Other financial intermediaries,(e.g.,via a
16、commercial bank).,14,A)Direct Finance,Process by which funds move directly from,lenders,to,borrowers,assisted by,an investment bank.,It does not imply an asset asset transformation 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.,15,B)INDIRECT FINANCE,Pr
資本市場(chǎng)和金融機(jī)構(gòu)(10)
