Chapter 3 Financial Instruments, Markets, and Institutions What does the finance mean？ 3.1 flow of funds 3.1.1 the flow of funds from saver-lender to borrower-spenders saver-lender-------------------------------borrower-spenders getting interest, dividends investment households business firms business firms governments governments households 3.1.2 Two types of financing Funds flow directly through financial markets -direct finance（直 接金融、直接融资） direct securities 直接证券 Funds flow indirectly through financial intermediaries -indirect finance (间接金融、间接融资） indirect securities 间接证券 What advantages and disadvantages do the two types of financing possess? 3.1.3 Advantages and disadvantages of the two types of financing 1. direct finance 2. indirect finance Informational Asymmetries in Financial Market(信息不对称) Informational Asymmetries：指某些市场参与者拥有另一些市 场参与者所不拥有的信息。 Asymmetry can create many difficulties in the availability and distribution information cause two problems. vadverse selection 逆向选择 A problem of asymmetric information that occurs, in the case of a debt contract, at the origination stage because lenders can not differentiate between high and low quality borrowers. 过高的利率使逆向选择的概率增加。为什么？ vMoral hazard 道德风险 A problem of asymmetric information occurring after a loan is made. In particular, the borrower may become riskier without being detected by the lender. 防范风险的根本措施就是保证信息的 Availability可得性 Transparency透明度 Accountability 可靠性 Sound financial decisions require adequate and accurate financial information. 3.2.financial instruments and markets 3.2.1 Financial instruments：是以货币计值的，载有 金融交易条件、金融交易双方各自权利义务的信用 工具，或金融合约。是债权债务关系并借以进行货 币资金交易的法律凭证。 金融工具的特性： -----流动性 -----风险性：金融工具的风险源与到期不能收回最初 投入的全部资金，包括违约风险和市场风险。 ----偿还期：偿还期限是指债务人必须全部归还本金 之前所经历的时间。 ----收益率：是指持有金融工具所具有的收益与本金 的比率。 3.2.2 primary market Securities are issued when borrower-spenders raise funds by issuing securities in primary market 3.2.3 secondary markets Existing securities are bought and sold. 场内市场，是在证券交易所内集中进行已上市股票交易所 形成的市场。 场外市场：是在证券交易所之外，股票买卖双方通过专门 从事股票买卖的证券商间接进行交易或直接进行交易的市场 。 Over-the-counter markets 柜台交易市场 按交易对象来分，金融市场还可以分为主板市场 和二板市场。从广义伤讲，凡属于针对大型成熟公司 的股票市场，称之为主板市场，而面向中小公司的市 场都可称为二板市场。 3.2.4 Bonds represent borrowing Bond: A liability issued by a government or a business promising to pay the holder a fixed cash amount at a specified maturity date and usually to make regular interest payments in the interim. corporate bonds government bonds Municipal bonds 3.2.5 Stock represent ownership Stock (equities) : Shares of ownership in corporation. 马克思：“股票，如果没有欺诈，它们就是对一个股 份公司拥有的实际资本的所有权证书和索取每年由此 生出的剩余价值的凭证。” Holding a stock certificate means that the holder owns part of corporation. Two types of stocks preferred stock Convertible preferred stock can be converted into common stock at a predetermined price. common stock Common stockholders get a residual or variable dividend that fluctuates with the company’s profits. 股价指数:反映整个股票市场上各种 股票的市场价格的总体水平及其变动情况 的一种指标。 Dow Jones Averages 四组分类指数： （1）道琼斯工业平均指数。 （2）道琼斯运输业平均指数 （3）道琼斯公用事业平均指数 （4）道琼斯综合平均指数 Standard &PoorsComposite Index Financial Times—Stock Exchange 100 Index，简称FTSEl00 Nikkei 2251ndex，简称NK225 bull market and bear markets bull market :a market in which stock prices are rising. bear market: a market in which stock prices are falling. q股票的收益来自哪些渠道? qThe factors which influence the price of stock? 3.2.6 mortgages involve real estate Mortgages are debts incurred by someone who is borrowing in order to buy land or buildings, with the land or building serving as “security”, or collateral or the lender. Just like the bonds, mortgages are debt instruments that promise to pay the lenders interest for a stated number of years and then repay the face value of principal (本金) at maturity. Three types of Mortgages : one-to four-family home mortgages multifamily home residential mortgages commercial mortgages 25-30 years Mortgages can be classified into: FHA-VA Mortgages conventional mortgages Risks of mortgages Fixed-rate securities Variable-rate (floating rate) 3.2.7 Derivatives: options and futures Options and futures contracts are not used by corporations or individuals to raise funds. They are financial instruments in managing risk exposure. Options and futures are often lumped together, they both represent contractual agreements between two parties concerning some third assets. Derivative financial instruments 1. Financial Futures Futures contracts whose underlying assets are securities or, in index futures, the cash value of a group securities. 金融期货大致可分为三大类别： 一是外汇期货； 二是利率期货； 三是股价指数期货。 The differences between foreign exchange futures market and forward foreign exchange market Options(选择权）:是一种能在未来某特定时间以特 定价格买进或卖出一定数量的某种特定商品的权利。 Options contracts also deal in rights and obligations, however these rights and obligations are separated. Financial options Risk? buyer and seller 期权购买者与期权出售者 call option and put option买人期权与卖出期权 A call option gives the owner the right to buy the underlining asset. A put option gives the owner the right to sell the underlining asset. Strike Price（协定价格） or Exercise Price（执行 价格) The predetermined price in an option that the underlying asset can be bought at (call) or sold for (put). Premium 期权费，保险费或权利金 是指期权购买者为获得期权合约所赋予的权利而向 期权出售者支付的费用。 European Option and American Option 欧式期权 与美式期权 European Option：期权购买者只能在期权到期 日这一天行使其权利。 American Option：期权购买者既可在期权到期 日这一天行使期权利，也可在期权到期日之前的任 何一个营业日行使其权利。 3.3 financial intermediaries: purposes and profile 3.1 the role of financial intermediaries The role of financial intermediaries: “go-betweens”, which is reflected in their balance sheets. Why do financial intermediaries exist? Why do they have such big buildings? 3.1.1 Transaction cost 3.1.2 Diversification Diversification is the second important reason saver-lenders often choose to invest in financial intermediaries. 3.1.3the production of information the existence of financial intermediaries can provide information services. Index fund: an fund that simply buy the stock or bonds that compose a well-known index. The existence of financial intermediaries has a very beneficial effect on economic growth. 3.2 financial intermediaries in profile ---commercial banks ---private noninsured pension funds ---mutual fund ---life insurance companies ---state and local government retirement funds ---money market mutual funds ---savings and load association s ---property and casualty insurance companies ---commercial and consumer finance companies ---credit unions