Chapter 2: The Capital Market Flashcards
3 elements of utmost importance to the industry
1) financial intermediaries
2) financial markets
3) financial instruments
Direct Investment example
purchasing a house
Indirect Investment example
purchasing a stock
3 Characteristics of Capital
1) it is mobile
2) it is scarce
3) it is sensitive to its environment
Middleman
financial intermediary
Structure Product
a financially engineered investment product that can have the characteristics of bonds, equities, and investment funds.
Bid
the highest price a buyer is willing to pay
Ask
the lowest price a seller is willing to accept
Spread
difference between the bid and ask price
Liquid market is one where the following conditions exist:
- frequent sales
- small price spreads
- small price fluctuations from sale to sale
TSX
lists senior equities, income trusts, ETFs and some debt instruments that are convertible into a listed equity.
TSX Venture
trades junior equities and some debentures
TSX Alpha Exchange
offers trading in some securities on the TSX and TSX Venture Exchange
The Montreal Exchange/Bourse de Montreal
trades all financial and equity futures and options
The Natural Gas Exchange
provides a trading mechanism for N.A. natural gas and electricity markets
Canadian Securities Exchange
lists equities of emerging (newer) companies
ICE Futures Exchange
trades agricultural futures and options
Aequitas NEO Exchange
provides listing services and facilitates the trading of securities that are listed on the Aequitas NEO exchange, as well as the TSX and TSX Venture Exchange.
The Nodal Exchange
a derivative exchange that provides contracts to N.A. energy market participants.
Dealer Markets
consists of networks of dealers who trade with each other either through a computer network or over the telephone.
Auction Markets
Stock exchange
over the counter (OTC)
company is too small low investor interest low volume of trading in its shares company doesn't want to be listed company is unwilling to abide by exchange rules
CanDeal
- member of the IIROC
- recognized as an ATS
- operated by the TMX group
- offers institutional investors access to government and money market securities.
CBID
an ATS that operates two fixed-income marketplaces, retail and institutional
MarketAxess
Member of IIROC in Quebec and Ontario
provides market data and a trading platform with access to competitive pricing through multiple dealers for a wide range of fixed income instruments.
CanPX
a joint venture with several IIROC member firms.
provides investors with real-time bid and offer prices, with volume information on GoC bonds and T-bills.
