Capital Markets and Securities Flashcards
(25 cards)
What are capital markets
Capital markets are long-term finance markets
What are money markets
Money markets are short-term finance markets
What are the different types of markets
The different types of markets are:
- Capital markets
- Money markets
- Foreign exchange markets
- Derivative markets
Who are the participants of financial markets
Participants of financial markets are:
- Investors
- Traders
- Analysts
- Exchanges
- Banks
- Brokers
What’s issued in primary markets
New securities are issued in primary markets
What’s traded in secondary markets
Existing securities are traded in secondary markets
What are equities
Equities are dividends + ownership
What are bonds
Bonds are fixed interest + redemption
What is intrinsic value
Intrinsic value = Present value of expected cash flows using risk-adjusted discount rate
What is market price driven by
Market price is driven by information, opinions, and news
What’s the role of the stock exchange
The role of the stock exchange is to:
- Provide infrastructure for issuing and trading securities
What are Cum-dividends
Cum dividends are upcoming dividneds
What are Ex0dividends
Ex-dividends are dividends already paid out
What is clean price
Clean price = Cum price - dividend
What are equity indices used for
Equity indices are used for comparison, valuation benchmarks, and CAPM market proxy
What are the different market efficiency forms
The different market efficiency forms are:
- Weak form
- Semi-strong
- Strong
What is weak form
Weak form means prices reflect past price info
What is a semi-strong form
Semi-strong form means prices reflect all public info
What is strong form
Strong form means prices reflect all info, even inside info
What happens to market price is the news are in-line with results
In-line results means no major price change
What happens to market price if news is better than expected
If news is better than expected then share prices rise
What happens to market price there is a profit warning or CEO resignation
If there is a profit warning or CEO resignation the share price falls
What happens to share prices if there is a major new contract
If there is a major new contract then share prices rise
