ChaHowSecuriiesAreraded金融工程南開大學(xué)

HowSecuritiesAreTradedChapter3Primaryvs.SecondarySecuritySalesPrimaryNewissueKeyfactor:issuerreceivestheproceedsfromthesale.SecondaryExistingownersellstoanotherparty.Issuingfirmdoesn’treceiveproceedsandisnotdirectlyinvolved.InvestmentBankingArrangementsUnderwrittenvs.“BestEfforts”Underwritten:firmcommitmentonproceedstotheissuingfirm.BestEfforts:nofirmcommitment.Negotiatedvs.CompetitiveBidNegotiated:issuingfirmnegotiatestermswithinvestmentbanker.Competitivebid:issuerstructurestheofferingandsecuresbids.PublicOfferingsPublicofferings:registeredwiththeSECandsaleismadetotheinvestingpublic.Shelfregistration(Rule415,since1982)InitialPublicOfferings(IPOs)EvidenceofunderpricingPerformancePrivatePlacementsPrivateplacement:saletoalimitednumberofsophisticatedinvestorsnotrequiringtheprotectionofregistration.Dominatedbyinstitutions.Veryactivemarketfordebtsecurities.Notactiveforstockofferings.OrganizationofSecondaryMarketsOrganizedexchangesOTCmarketThirdmarketFourthmarketOrganizedExchangesAuctionmarketswithcentralizedorderflow.Dealershipfunction:canbecompetitiveorassignedbytheexchange(Specialists).Securities:stock,futurescontracts,options,andtoalesserextent,bonds.Examples:NYSE,AMEX,Regionals,CBOE.OTCMarketDealermarketwithoutcentralizedorderflow.NASDAQ:largestorganizedstockmarketforOTCtrading;informationsystemforindividuals,brokersanddealers.Securities:stocks,bondsandsomederivatives.MostsecondarybondstransactionsThirdMarketTradingoflistedsecuritiesawayfromtheexchange.Institutionalmarket:tofacilitatetradesoflargerblocksofsecurities.InvolvesservicesofdealersandbrokersFourthMarketInstitutionstradingdirectlywithinstitutionsNomiddlemaninvolvedinthetransactionOrganizedinformationandtradingsystemsECNDevelopmentInternationalMarketStructuresLondonStockExchangeDealermarketsimilartoNASDAQStockExchangeAutomatedQuotationGreaterAnonymityTokyoStockExchangeNomarketmakingserviceSartoriprovidesbookkeepingserviceFeatureafloorandelectronictradingGlobalMarketAlliancesCostsofTradingCommission:feepaidtobrokerformakingthetransactionSpread:costoftradingwithdealerBid:pricedealerwillbuyfromyouAsk:pricedealerwillselltoyouSpread:ask-bidCombination:onsometradesbotharepaidTypesofOrdersInstructionstothebrokersonhowtocompletetheorderMarketLimitStoplossUsingonlyaportionoftheproceedsforaninvestment.Borrowremainingcomponent.Marginarrangementsdifferforstocksandfutures.MarginTradingMaximummarginCurrently50%SetbytheFedMaintenancemarginMinimumleveltheequitymargincanbeMargincallCallformoreequityfundsStockMarginTradingXCorp$7050%InitialMargin40%MaintenanceMargin1000SharesPurchasedInitialPositionStock$70,000Borrowed$35,000Equity$35,000MarginTrading-InitialConditionsMarginTrading-MaintenanceMarginStockpricefallsto$60pershareNewPositionStock$60,000Borrowed$35,000Equity25,000Margin%=$25,000/$60,000=41.67%MarginTrading-MarginCallHowfarcanthestockpricefallbeforeamargincall?(1000P-$35,000)*/1000P=40%P=$58.33*1000P-AmountBorrowed=EquityShortSalesPurpose:toprofitfromadeclineinthepriceofastockorsecurity.MechanicsBorrowstockthroughadealer.Sellitanddepositproceedsandmargininanaccount.Closingouttheposition:buythestockandreturntothepartyfromwhichitwasborrowed.ShortSale-InitialConditionsZCorp100Shares50%InitialMargin30%MaintenanceMargin$100InitialPriceSaleProceeds$10,000Margin&Equity5,000StockOwed10,000ShortSale-MaintenanceMarginStockPriceRisesto$110SaleProceeds$10,000InitialMargin5,000StockOwed11,000NetEquity4,000Margin%(4000/11000)36%ShortSale-MarginCallHowmuchcanthestockpricerisebeforeamargincall?($15,000*-100P)/(100P)=30%P=$115.38*InitialmarginplussaleproceedsRegulationofSecuritiesMarketsGovernmentRegulationSelf-RegulationCircuitBreakersInsiderTradingECNsandFragmentationHowSecuritiesAreTradedChapter3Primaryvs.SecondarySecuritySalesPrimaryNewissueKeyfactor:issuerreceivestheproceedsfromthesale.SecondaryExistingownersellstoanotherparty.Issuingfirmdoesn’’treceiveproceedsandisnotdirectlyinvolved.InvestmentBankingArrangementsUnderwrittenvs.““BestEfforts””Underwritten:firmcommitmentonproceedstotheissuingfirm.BestEfforts:nofirmcommitment.Negotiatedvs.CompetitiveBidNegotiated:issuingfirmnegotiatestermswithinvestmentbanker.Competitivebid:issuerstructurestheofferingandsecuresbids.PublicOfferingsPublicofferings:registeredwiththeSECandsaleismadetotheinvestingpublic.Shelfregistration(Rule415,since1982)InitialPublicOfferings(IPOs)EvidenceofunderpricingPerformancePrivatePlacementsPrivateplacement:saletoalimitednumberofsophisticatedinvestorsnotrequiringtheprotectionofregistration.Dominatedbyinstitutions.Veryactivemarketfordebtsecurities.Notactiveforstockofferings.OrganizationofSecondaryMarketsOrganizedexchangesOTCmarketThirdmarketFourthmarketOrganizedExchangesAuctionmarketswithcentralizedorderflow.Dealershipfunction:canbecompetitiveorassignedbytheexchange(Specialists).Securities:stock,futurescontracts,options,andtoalesserextent,bonds.Examples:NYSE,AMEX,Regionals,CBOE.OTCMarketDealermarketwithoutcentralizedorderflow.NASDAQ:largestorganizedstockmarketforOTCtrading;informationsystemforindividuals,brokersanddealers.Securities:stocks,bondsandsomederivatives.MostsecondarybondstransactionsThirdMarketTradingoflistedsecuritiesawayfromtheexchange.Institutionalmarket:tofacilitatetradesoflargerblocksofsecurities.InvolvesservicesofdealersandbrokersFourthMarketInstitutionstradingdirectlywithinstitutionsNomiddlemaninvolvedinthetransactionOrganizedinformationandtradingsystemsECNDevelopmentInternationalMarketStructuresLondonStockExchangeDealermarketsimilartoNASDAQStockExchangeAutomatedQuotationGreaterAnonymityTokyoStockExchangeNomarketmakingserviceSartoriprovidesbookkeepingserviceFeatureafloorandelectronictradingGlobalMarketAlliancesCostsofTradingCommission:feepaidtobrokerformakingthetransactionSpread:costoftradingwithdealerBid:pricedealerwillbuyfromyouAsk:pricedealerwillselltoyouSpread:ask-bidCombination:onsometradesbotharepaidTypesofOrdersInstructionstothebrokersonhowtocompletetheorderMarketLimitStoplossUsingonlyaportionoftheproceedsforaninvestment.Borrowremainingcomponent.Marginarrangementsdifferforstocksandfutures.MarginTradingMaximummarginCurrently50%SetbytheFedMaintenancemarginMinimumleveltheequitymargincanbeMargincallCallformoreequityfundsStockMarginTradingXCorp$7050%InitialMargin40%MaintenanceMargin1000SharesPurchasedInitialPositionStock$70,000Borrowed$35,000Equity$35,000MarginTrading-InitialConditionsMarginTrading-MaintenanceMarginStockpricefallsto$60pershareNewPositionStock$60,000Borrowed$35,000Equity25,000Margin%=$25,000/$60,000=41.67%MarginTrading-MarginCallHowfarcanthestockpricefallbeforeamargincall?(1000P-$35,000)*/1000P=40%P=$58.33*1000P-AmountBorrowed=EquityShortSalesPurpose:toprofitfromadeclineinthepriceofastockorsecurity.MechanicsBorrowstockthroughadealer.Sellitanddepositproceedsandmargininanaccount.