Financialinstruments金融工具

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1、3.FINANCIALMARKETSANDINSTRUMENTSFinancialmarkets&instrumentsBusinessesraisemoneytofinancecurrentoperationsaswellasforfuturegrowthMoneyisraisedInfinancialmarkets(capitalmarketsandmoneymarkets)Byissuingfinancialinstruments(alsocalledsecurities)whichgivetheholders

2、claimsonfuturecashflowsofthebusiness2FinancialmarketsFinancialmarketsdescribesthedistributionsystembywhichcash-deficitentitiesengageintransactionswithcash-surplusentities.Besidesbusinesses,participantsincludegovernmentagencies,pensionfunds,endowments,individuals

3、,commercialbanks,insurancecompanies…RegulatedbySecurities&ExchangeCommissionCapitalmarketsdealwithlongterminstrumentslikestocksandbondswhilemoneymarketsdealwithshort-terminstrumentswithmaturitylessthanoneyearsuchascommercialpaper.3FinancialinstrumentsInstruments

4、mustappealtoinvestorsandmeettheneedsofthecompany.TheyaredesignedkeepinginmindInvestors’claimsonfuturecashflowsInvestors’righttoparticipateincompanydecisionsInvestors’claimsoncompanyassetsintheeventofliquidationSECregulationsrequireadequatedisclosurebeforepurchas

5、e.4TypesofinstrumentsDebtinstrumentsofferfixedclaims.Equityoffersresidualclaims.Hybridssuchasconvertibledebtcombineboth.Derivativessuchasforwards,futuresandoptionsprovideahedgeagainstrisk5BONDSFixedincomesecurity–interestpaidperiodicallyRepaymentofprincipalatmat

6、urity.Bondsaresoldtothepublicinsmallincrements,suchas$1000,andcanbetradedonanexchangeafterissue.Yield(returnwithreferencetomarketprice)inverselyrelatedtomarketprice6BondcharacteristicsParvalueMaturitydateCouponrateCurrentyieldvs.yieldtomaturity(YTM)Sinkingfundfo

7、rperiodicrepaymentofprincipalVariableratevs.fixedratebonds7CallProvisions提前赎回条款Righttoretirebondspriortomaturity.Investorsrequireapremiumforcallprovisions.Callpriceistypicallyamodestpremiumabovepar.Delayedcallpreventsretirementbeforesomedate.Calloptionshelpcompa

8、niestakeadvantageofdeclinesininterestratesandrearrangecapitalstructure8Covenants契约Contractualtermstoprotectbondholdersbyimpactingmanagementdecisions.Examples:Lowerlim