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Efficient market: the market price provides the unbiased estimate of the true value. Efficient market doesn’t mean price be equal to true value every point in time. However, the deviations must be random. If the market is efficient: Process of valuation  justifying the market price If not efficient  valuation process spot under/over valued fi...

39 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 870 | Lượt tải: 0

Efficient Market Hypothesis (EMH) Do security prices reflect information ? Why look at market efficiency? Implications for business and corporate finance Implications for investment

28 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 934 | Lượt tải: 0

Single Factor Model Returns on a security come from two sources Common macro-economic factor Firm specific events Possible common macro-economic factors Gross Domestic Product Growth Interest Rates

18 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 894 | Lượt tải: 0

Capital Asset Pricing Model (CAPM) It is the equilibrium model that underlies all modern financial theory Derived using principles of diversification with simplified assumptions Markowitz, Sharpe, Lintner and Mossin are researchers credited with its development

23 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 1001 | Lượt tải: 0

Diversification and Portfolio Risk Market risk Systematic or nondiversifiable Firm-specific risk Diversifiable or nonsystematic

38 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 1001 | Lượt tải: 0

Risk Aversion and Utility Values Risk averse investors reject investment portfolios that are fair games or worse These investors are willing to consider only risk-free or speculative prospects with positive risk premiums Intuitively one would rank those portfolios as more attractive with higher expected returns

33 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 987 | Lượt tải: 0

Factors Influencing Rates Supply Households Demand Businesses Government’s Net Supply and/or Demand Federal Reserve Actions

38 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 890 | Lượt tải: 0

These companies perform several important functions for investors: Administration & record keeping Diversification & divisibility Professional management Reduced transaction costs

23 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 904 | Lượt tải: 0

How Firms Issue Securities Primary New issue Key factor: issuer receives the proceeds from the sale Secondary Existing owner sells to another party Issuing firm doesn’t receive proceeds and is not directly involved

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Major Classes of Financial Assets or Securities Money market Bond market Equity Securities Indexes Derivative markets

54 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 945 | Lượt tải: 0