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Lower Trading Costs on Futures vs. Spot Market for Stock Theory of optimal bid-asked spread. Even though futures markets are not dealer markets, there is in effect a bid-asked spread, and it is narrower than for individual stocks. Less likely to be superior information to “pick off” dealers in stock index futures market than in market for indivi...

30 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 752 | Lượt tải: 0

First Futures Market: Osaka Begun at Dojima, Osaka, Japan, in 1670s. World’s only futures market until 1860s. Dojima was center for rice trade, with 91 rice warehouses in 1673. Dojima futures exchange had precise definitions of quality, delivery date and place, experts who evaluated rice quality, and clearinghouses for contracts. Trading floor...

24 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 751 | Lượt tải: 0

Trends in Democratization of Finance Financial and insurance institutions began with intellectuals and wealthy class Gradual spread of risk management institutions required marketing, spread of financial enlightenment, government support

38 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 745 | Lượt tải: 0

Brokers, Dealers Exchanges & ECNs Brokers deal with public. Example: Merrill Lynch Dealers execute trades Exchanges are places where dealers operate. Examples: NYSE, Nasdaq, Arizona Exchange Electronic Communications Networks (ECNs) allow investors to communicate with each other, and to exchange. Examples: Island, Instinet (now Inet)

28 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 718 | Lượt tải: 0

Migration of Capital: Main Street to Wall Street Trend over decades has been to greater institutional investing, and volume of trade on stock market now dominated by it. Increasing tendency for institutions to participate in corporate governance, solving the control problem referred to by Berle and Means. An epic shift of power in our society to...

38 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 795 | Lượt tải: 0

Glass-Steagall Act 1933 The modern concept of “Investment Bank” was created in the Glass-Steagall act (Banking Act of 1933). Glass Steagall separated commercial banks, investment banks, and insurance companies. Carter Glass, Senator from Virginia, believed that commercial banks securities operations had contributed to the crash of 1929, that bank...

23 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 887 | Lượt tải: 0

Bank of England 1694 Granted monopoly on joint stock banking by Parliament in return for war loans. Not an invention of economists, started off as a powerful bank that was able to demand that other banks held deposits in it. Did not have government monopoly on note issue, but achieved it through its monopoly power.

27 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 763 | Lượt tải: 0

What Are Banks? Commercial Banks: Principal activity: receives deposits and makes loans. Investment banks (US): Purchaser or underwriter of large blocks of securities, reseller of them. The word “bank” is misleading, since according to the Glass Steagall Act 1933 they could not accept deposits. Central Banks

25 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 748 | Lượt tải: 0

Real Estate: an Important Asset Class Until recent stock market boom, single family homes value in US approximated value of entire stock market. Home mortgages 1999: $4.62 trillion Consumer credit is only 1.46 trillion. US National debt held by public is only $3 trillion (Source: FRB, Balance Sheets for US Economy)

34 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 818 | Lượt tải: 0

Leverage Corporate Leverage is measured by Debt D divided by equity E. Highly levered firms court bankruptcy Unlevered firms cannot go bankrupt (Microsoft owned $5.9 billion of other firms’ long-term debt and $23.8 billion in cash and short-term investments in 2000.

20 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 716 | Lượt tải: 0