投资学[共413页]

1、S1UQE1S9U_Learning ObjectivesChapter Overview* examine the differences between financial assets and real assets* proceed to the three broad sectors of financial environment:Households , businesses, government* discuss recenttrendsin financialmarke ts.* conclude with a discussion of the relationship

2、between households and the business sector.擀 After studying this chapter:* understand differences in financial and real assets* identify the major participants in the financial markets.* describe the role of financial assets and markets in the economy* understand how the financial system meets the n

3、eeds of economic participants.* describe ongoinginnovation in thefinancial markets.McGraw-Hill/IrwinInvestments & Financial Assets* Essential nature of investment* Reduced current consumption:people aged between 25 and 50 are earning more than they currently wish to spend, and when they are old or r

4、etired they spend more than they can earn. So people need to shift their purchasing power from high- earnings periods to lowearning periods of life people need to invest, people need to reduce current consumption in order to plan laterconsump tiori.* Planned later consumptionThe concept of giving up

5、 current consumption to invest fund inassetsthat allow greaterconsumption in the future is the key notion to start discussion of the chapter material.Investments & Financial Assets* Real Assets* Assets used to produce goods and services:Assets used to produce goods and services. The materialwealth o

6、f a society is determined ultimately by the productive capacity of its economythe goods and service that ca beprovided to its members. This productive capacity is a function of the real assets of the economy: theland , buildings , knowledge, and machines and workers. Together， physical and “human as

7、sets generate the entire spectrum ofoutput produced and consumed by the society.Investments & Financial Assets* Financial Assets* Claims on real assets:Financial assets contribute to the productive capacity of the economy indirectly， because t hey allow for separation of the ownership and management

8、 of the firm and facilitate the transfer of funds to enterprises with attractive investment opportunities.For example ， Bondholders, are entitled to a flow of income based on the interest rate and par value of the bond. Equityholders or stockholders are entitled to any residual income after bondhold

9、ers and other creditors are paid .McGraw-Hill/IrwinDifferences between financial andreal assets:* Ways of distinguishing between financial and real assets:1 ) Real assets appear only on the asset side of the balance sheet; financial assets always appear on both sides of balance sheet.2) Real assets

10、are destroyed only by accident or by wearing out over time; financial assets are created and destroyed in the ordinary course of doing business.3) Real assets produce goods and services, whereas financial assets define the allocation of income or wea1th among investors.Role of Financial Assets andMa

11、rketsJn the Economy* Consumption TimingFinancial assets and markets allow an individual or firm to adjust consumption to achieve the highest level of satisfaction or utility， to shift one， s purchasing power from high-earnings periods to low-earnings periods of life. How can you shift your purchasin

12、g power from high-earnings periods to lowearnings periods of life? One way is to store your wealth in financial assets. In high-earnings periods ，you can invest your savings in financial assets such as stocks and bonds. In low-earnings periods, you can sell these assets to provide funds for your con

13、sumption needs.MarketsJn the Economy* Allocation of RiskMarkets and financial assets allow participants to shift risk to the parties that are most will to bear that risk.For example, when GM builds its anto plants， its management can not know for sure wha t cash flows t hose pla nts will generate. F

14、inancial markets and the diverse financial instrunients traded in those markets allow investors with the greatest taste for risk to bear that risk, while other less- risktolerant individuals can, to a greater extent，stay on the sidelines. if GM raises the funds to build its antoplant by selling both

15、 stocks and bonds to the public, the more optimistic， or risktolerant， investors buy shares of stock in GM. The more conservative individuals can buy GM bonds, which promise to provide a fixed payment.* Separation of OwnershipMarketsJn the EconomySeparation of Ownership and management:Financial mark

16、ets also allow the separation of ownership from management and increase the utilization of the assets of the economy.For example , if some stockholders decide they no longer wish to hold shares in the firm, they can sell their assets to other investors, with no impact on the management of the firmHo

17、w can all of the disparate owners of the firm, agree on the objectives of the firm? The financial markets provide some guidance All may agree that the firnf s management should pursue strategies that enhance the value of their sharesThis courses agency problems : because of managers, who are hired a

18、s agents of the shareholders, may pursue their own interests instead.For example, they might engage in empire building, or avoid risky projects to protect their own jobs, or overconsume luxuries such as corporate jets, reasoning that the cost of such perquisites is largely borne by the shareholdersF

19、inancial System Clientsand Their NeedsSeveral mechanisms have evolved to mitigate potential agency problem:First, compensation plans tie the income of the success of the firm.Second, while boards of directors are sometimes portrayed as defenders of top management, they can, and in recent years incre

20、asingly do, force out management tearns that are underperforming.Third, outsiders such as security analysts and large institutional investors such as pension funds monitor firms closely and make the life of poor performers at the least tmcomfortableFinally, bad performers are subject to the threat o

21、f takeover.Household Sector* Primary Need: Invest FundsHouseholds look to the financial markets primarily for investment opportunities. household financial decisions are concerned with how to invest money. Most householders are potentially interested in a wide array of assets， and the assets that ar

22、e attractive can vary considerably depending on the household， s economic situation.1) taxes lead to varying asset demands because people in different tax brackets transform before-tax income to after-tax income at different rates.2) risk consideration also create demand for a diverse set of investm

23、ent alternations. At an obvious level, differences in risk tolerance create demand for assets with a variety of risk-return combinations.* Business Sector* Primary Need: Raise FundsBusinesses look to the financial markets to provide an efficient means of securing financing for investment projects. B

24、usinesses need to raise money to finance their investments in real assets. Broadly speaking, there are two ways for businesses to raise moneythey borrow it， either from banks or directly from householders by issuing bonds, or they can “take in new partners by issuing stocks, which are ownership shar

25、es in the firm. Businesses issuing securities to the public have several objectives: Firsthey want to get the best price possible for their securities. Second, they want to market the issues to the public at the lowest possible cost.Government Sector* Primary Need: Raise FundsGovernment look to the

26、financial markets to provide an efficient means of securing financing for investment projects. Governments often need to finance their expenditures by borrowing when tax revenues are not sufficient to cover expenditures. Governments also can print money, of course, but this source of funds is limite

27、d by its inflationary implications. Governments have a special advantage in borrowing money because their taxing power makes them very creditworthy and therefore, able to borrow at the lowest rates. A second, special role of the government is in regulating the financial environment.How the Financial

28、 System Meetsthe Needs of Participants* Financial Intermediation* Investment Banking* Financial Innovation & Derivatives* Responding to Regulation & TaxesMcGraw-Hill/IrwinHow the Financial System Meetsthe Needs of Participants* Financial IntermediationFinancial intermediaries such as banks, investme

29、nt companies, insurance companies or credit unions meet the needs of investors by pooling small amounts of investment funds and investing those funds in an efficient fashion. They provide valuable services of diversifiedtion expertise to their dients.Economies of scale also explain the proliferation

30、 of analytic services available to investors. Newletters, databases, and brokerage house research services all exploit the fact that the expense of collecting information is best borne by having a few age nts engage in research to be sold to a large die nt base This setup arises naturaily. Investors

31、 clearly want informstion， but， with only small portfolios to manage, they do not find it economical to incur the expense of collecting it. Hence a profit opportunity emerges: A firm can perform t his service for many dients and charge for it.* Investment BankingInvestment bankers provide valuable s

32、ervices to businesses and government making it more efficient for these firms to raise funds in the market.Investment bankers such asMerrill lynch, Salomon Smith Barney, or Goldman, Sachs advise the issuing firm on the prices it can charge for the securities issued, market conditions， appropriate in

33、terest rates， and so forth. Ultimately, the investment banking firm handles the marketing of the security issue to the publicInvestment bankers can provide a certification role- a seal of approval - to securities issuers. Their investment in reputation is another type of scale economy that arises fr

34、om frequent participation in the capital marke ts.* Financial Innovation & DerivativesSignificant irrnovation has taken place in the last few decades with the development of derivative securities.Derivative securities(pass-through security， collateralized mortgaged obligation) make is possible for f

35、irms to secure capital at the lowest possible cost and make it more efficient for firms to manage risk. The financial system constantly innovates to minimize the costs associated with taxes and regulation.Examples of suchinnovation include the zero coupon bond and development of the Eurodollar marke

36、t.McGraw-Hill/IrwinHow the Financial System Meetsthe Needs of Participants* Responding to Regulation & TaxesMuch financial innovation and security creation may be viewed as a natural innovation is the ongoing game played between governments and investors on taxation and regulation.For example, the R

37、egulation Q which limited bank deposit interest rates， spurred the growth of the money market industry， it also was one reason for the birth of the Eurodollar market; Zero-coupon bond is another innovation attributable largely to tax avoidance motives; The Eurobond market came into existence as a re

38、sponse to changes in U.S. tax law.McGraw-Hill/Irwininformation and communicationnetworksTechnology and Delivery of Service* Computer advancements: The complex cash flow bundling and unbundling would not be possible without accessiblecomputing power.On-linetrading:On-line tradingconnects a customerdi

39、rectly to a brokerage firm .The development of online trading capabilities and financial information that is available on the web has increased capabilities of individual investors.* More complete and timely information：Theinternet has also allowed vast amounts of information to be made cheaply and

40、widely available to the publicInvestments and Innovation* US investors commonly participate in foreign investment opportunities in several ways:* 1) purchase foreign securities that represent American Depositary Receipts(ADRs)， which are domestically traded securities that represent claims to shares

41、 of foreign stocks;* 2) purchase foreign securities that are offered in dollars;* 3) buy mutual funds that invest internationally;* 4) buy derivative securities with payoffs that depend on prices in foreign security market.McGraw-Hill/IrwinKey Trends GlobalizationIntetnational and Global MarketsCont

42、inueDeveloping* Managing foreign exchange: The globalization that has taken place in the last several decades has increased the risk associated with foreign exchange The discussion of foreign exchange is related to both domestic and international investments. Since more of most firms， sales are now

43、international， foreign exchange has implications for performance of US investmerits. When diversification is expanded to international stocks, performance depends not only on performance of the stock but also performance of the currency.* Diversification to improverange of investment choices canperf

44、ormance: A wider benefit investors.* InstTuments and vehicles continue todevelop Globalization requires efficient communicationtechnology and the dismantling of regulatory constraints.* Information and analysisimproves :Improved information has played and continues to play an important role in the e

45、xpansion of international investing.McGraw-Hill/IrwinKey Trends Securitization & CreditEnhancementSecuritization & CreditEnhancement* Offers opportimities for investors and originators* Changes in financial institutions and regulation* Improvement in information capabilitiesKey Trends Securitization

46、 & CreditEnhancement* Credit enhancement and its roleThe importance of credit enhancement， the process of some additional party guaranteeing the performance on the securities， was apparent from the initial development of the market. Initially, performance was partially guaranteed by the government o

47、r an agency of the government. As the market developed to other assets such as charge card receivables and automobile loans, private firms became involved in the credit enhancement process.McGraw-Hill/IrwinKey Trends Financial EngineeringRepackaging Services of FinancialIntermediariesBundling and un

48、bundling of cash flowsSlicing and dicing of cash flows: The process of financial engineering involves repackaging the cash flows from a security or an asset to enhance their marketability to different classes of investors. This activity will continue as long as financial intermediaries can add value

49、 to the total by repackaging the cash flows Some of the more creative securitization experienced problems when interest rates rose rather abruptly in 1995 One of the more exotic forms of debt instruments, inverse floaters, experienced large declines in value with the large and unanticipated rise in

50、interest rates. While these instruments do offer expanded capabilities for investment, they also demand improved risk management and assessment capabilities.Examples: strips, CMOs， dual purpose funds, principal/interest splitsThe Future* Globalization continues and offers more opportunities.* Securi

51、tization continues to develop* Continued development of derivatives and exotics* Strong fundamental foundation is critical* Integration of investments & corporate financeChapter 2 MHIand InstrumentsChapter Overview* The financial instruments traded in the primary and secondary markets.* an overview

52、discussion of money market, capital market instruments and derivative securities* The various market indexes * Options and futuresMajor Classes of Financial Assetsor Securities* understanding of the various financial instruments available to the potential investor* have an insight as to the interpre

53、tation, composition, and calculation process involved in the various market indexes presented on the evening news* understending of the basics of options and futures contracts.Debt* Money market instruments: The money market is a subsector of the fixed-income market. It consists of very shortterm de

54、bt securities that usually are highly marketableMajor Classes of Financial Assetsor Securities* Common stockCommon stock, also known as equity securities or equities， represent ownership shares in a corporation. The corporation is controlled by a broad of directors elected by the shareholders. The t

55、wo most important characteristics of common stock as an investment are its residual claim and limited liability features. Residual claim means that stockholders are the last in line of all those who have a claim on the assets and income of the corporation. Limited liability means that the most share

56、holders can lose in the event of failure of the corporation is their original investment.* Preferred stockPreferred stock has features similar to both equity and debt. Like a bond, it promises to pay to its holder a fixed amount of income each year. And it does not convey voting power regarding the

57、management of the firm. Preferred stock is an equity investment， however. The firm retains discretion to make the dividend payments to the preferred stockholders.* Derivative securitiesOne of the most significant developments in financial markets in recent years has been the growth of futures， optio

58、ns， and related derivatives markets. These instTuments provide payoffs that depend on the values of other assets such as commodity prices, bond and stock prices, or market index values.McGraw-Hill/IrwinMoney Market Instruments* Money Market* Debt Instruments* Derivatives* Capital Market* Bonds* Equity* DerivativesMoney market instruments include short-term, marketable， liquid, low-risk deb