Financial instruments 金融工具

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

2、hflowsofthebusiness2FinancialmarketsFinancialmarketsdescribesthedistributionsystembywhichcash-deficitentitiesengageintransactionswithcash-surplusentities.Besidesbusinesses,participantsincludegovernmentagencies,pensionfunds,endowments,individuals,commercialbanks,insurancecompanie

3、s…RegulatedbySecurities&ExchangeCommissionCapitalmarketsdealwithlongterminstrumentslikestocksandbondswhilemoneymarketsdealwithshort-terminstrumentswithmaturitylessthanoneyearsuchascommercialpaper.3FinancialinstrumentsInstrumentsmustappealtoinvestorsandmeettheneedsofthecompany.Th

4、eyaredesignedkeepinginmindInvestors’claimsonfuturecashflowsInvestors’righttoparticipateincompanydecisionsInvestors’claimsoncompanyassetsintheeventofliquidationSECregulationsrequireadequatedisclosurebeforepurchase.4TypesofinstrumentsDebtinstrumentsofferfixedclaims.Equityoffersres

5、idualclaims.Hybridssuchasconvertibledebtcombineboth.Derivativessuchasforwards,futuresandoptionsprovideahedgeagainstrisk5BONDSFixedincomesecurity–interestpaidperiodicallyRepaymentofprincipalatmaturity.Bondsaresoldtothepublicinsmallincrements,suchas$1000,andcanbetradedonanexchange

6、afterissue.Yield(returnwithreferencetomarketprice)inverselyrelatedtomarketprice6BondcharacteristicsParvalueMaturitydateCouponrateCurrentyieldvs.yieldtomaturity(YTM)SinkingfundforperiodicrepaymentofprincipalVariableratevs.fixedratebonds7CallProvisions提前赎回条款Righttoretirebondsprior

7、tomaturity.Investorsrequireapremiumforcallprovisions.Callpriceistypicallyamodestpremiumabovepar.Delayedcallpreventsretirementbeforesomedate.Calloptionshelpcompaniestakeadvantageofdeclinesininterestratesandrearrangecapitalstructure8Covenants契约Contractualtermstoprotectbondholdersb

8、yimpactingmanagementdecisions.Examples:Lowerlim