金融市场学第四版1、2章英文讲义

Chapter 1 Introduction

Types of Assets

Tangible Assets

Value is based on physical properties

Examples include buildings, land, machinery

Intangible Assets

Claim to future income

Examples include various types of financial assets

Types of Financial Assets

Bank loans

Government bonds

Corporate bonds

Municipal bonds

Foreign bond

Common stock

Preferred stock

Foreign stock

Debt vs. Equity

Debt Instruments

Fixed dollar payments

Examples include loans, bonds

Equity Claims

Dollar payment is based on earnings

Residual claims

Examples include common stock, partnership share

Price of Financial Asset and Risk

The price or value of a financial asset is equal to the present value of all expected future cash flows.

Expected rate of return

Risk of expected cash flow

(pp3,give present value)

Types of Investment Risks

Purchasing power risk or inflation risk

Default or credit risk

Exchange rate or currency risk

Role of Financial Assets

Transfer funds from surplus units to deficit units.

Transfer funds so as to redistribute unavoidable risk associated with cash flows generated from both tangible and intangible assets.

(pp5:examples analysis)

Key Points You Should Understand

Difference between tangible and financial assets

Difference between debt and equity

Cash flow of a financial asset

Three types of risks associated with financial asset

Two principal economic functions of financial assets

Role of Financial Markets

Determine price or required rate of return of asset.

Provide liquidity.

Reduce transactions costs, which consists of search costs and information costs.

(contrast by Chinese textbook)

Classification of Financial Markets

Debt vs. equity markets

Money market vs. capital market

Primary vs. secondary market

Cash or spot vs. derivatives market

Auction vs. over-the-counter vs. intermediated market

Financial Market Participants

Households

Business units

Federal, state, and local governments

Government agencies

Supranationals

Regulators

Key Points You Should Understand

Three economic functions of financial markets

Ways that financial markets can be classified

Market participants

Globalization of Financial Markets

Deregulation or liberalization of financial markets

Technological advances

Increased institutionalization

Classification of Global Financial Markets

Motivation for Using Foreign Markets and Euromarkets

Limited fund availability in internal market

Reduced cost of funds

Diversifying funding sources