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Fin Mar > Chapter 7 > Flashcards

Chapter 7 Flashcards

1
Q

Two broad segments of Stock Markets:

A
  1. The Organized Stock Exchange
  2. The Over-the-Counter (OTC) Exchange
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2
Q

principal objective of listing

A

provide liquidity and marketability

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3
Q

market in which national, state and local governments are the primarily borrowers of funds for highways, education, welfare and other public activities

A

Public Financial Market

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4
Q

Banks
Insurance Companies

A

Financial Intermediaries

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5
Q

PSE other term

A

Pamilihan Sapi ng Pilipinas

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6
Q

buying and selling of shares, currency, or other financial instruments in a single day. the intention is to profit from small price fluctuations - sometimes traders hold shares for only a few minutes.

A

DAY TRADING

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7
Q

a method of buying shares that involves the day trader borrowing a part of the sum needed from the broker who is executing the transaction

A

margin-trading

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8
Q

involves selling securities to the general public

A

Public Offerings

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9
Q

where securities are traded after between investors after securities are sold to public

Financial mangers are given feedback about their performance

A

SECONDARY MARKET

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10
Q

stock market is known as

A

barometer of the company’s economy

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11
Q

What Financial Markets Do?

A
  1. Raising Capital
  2. Commercial Transactions
  3. Price Setting
  4. Asset Valuation
  5. Arbitrage
  6. Investing
  7. Risk Management
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12
Q

What Financial Markets Do?
In countries with poorly developed financial markets, commodities and currencies may trade at very different prices in different location. As traders in financial markets attempt to profit from this divergences, prices move towards a uniform level, making the entire economy more efficient.

A
  1. Arbitrage
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13
Q

POTENTIAL DAY TRADERS SHOULD BE KNOWLEDGEABLE OF THE FOLLOWING

A

-Market Data
-Scalping
-Margin Trading
-Bid-offer spread

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14
Q

Stock Exchange Supplies: Regulates company’s behaviour through requirements called

A

listing agreement.

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15
Q

-physical location where stocks buying and selling transactions take place

A
  1. The Organized Stock Exchange
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16
Q

stocks are traded on an organized exchange. firms must meet certain minimum criteria.

A

Listed stocks

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17
Q

What Financial Markets Do?
Market prices offer the best way to determine the value of a firm or of the firm’s asset, or property

A
  1. Asset Valuation
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18
Q

What Financial Markets Do?
For firms to build new facilities, replace machinery or expand business in other ways

A
  1. Raising Capital
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19
Q

What Financial Markets Do?
Futures, options and other derivatives contracts enable markets to attach a price to risk and they also provide protection against many types of risks such as:

Possibility that foreign currency will lose value against the domestic currency before an export payment is received

A

risk management

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20
Q

link buyers and sellers by buying and selling securities and stated prices

A

Dealers

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21
Q

Securities of an entity may be listed at any of the ff. stages:

A

-at the time of public issue of shares/debentures
-at the time of rights issue of shares/debentures
-at the time of bonus issue of shares/debentures
-shares issued on amalgamation or merger.

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22
Q

strategy in which traders hold their share or financial asset for just few minutes or even seconds

A

scalping

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23
Q

an entity ( a corporation or mutual organization) which is the business bringing buyers and sellers of stocks and securities together.

A

Stock Exchange

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24
Q

What Financial Markets Do?
Financial Markets provide price discovery based upon the prices at which individuals are willing to buy and sell them

A
  1. Price Setting
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25
matches buyers with sellers of securities
Brokers
26
a contractual agreement by the borrower to pay the holder of the instrument fixed peso amounts at regular interval (interest and principal) until specified date (maturity date), when a final payment is made.
1. Debt Instruments (bonds or mortgage)
27
Enables money to flow around the world
Global Financial Markets
28
– maturity is between 1 to 10 years
Intermediate-term Debt Instruments
29
Funds in a financial market can be obtained by a firm or an individual in two ways:
1. Debt Instruments (bonds or mortgage) 2. Equity Instruments (common stock or ordinary stock)
30
POTENTIAL DAY TRADERS SHOULD BE AWARE THAT
Day trading is a high risk occupation Day trading is stressful Day trading is expensive
31
how many listed companies are there
30
32
market in which large corporations raised funds
Corporate Financial Market
33
-where shares, bonds and money market instruments are traded using a system of computer screens and telephones.
2. The Over-the-Counter (OTC) Exchange
34
price at which the securities are bought and sold on a recognized stock exchange
official quotation
35
Advantage of owning a corporation’s equities rather than its debt:
Equity holders benefit directly from any increases in the corporation’s profitability or asset value while debt holders do not share in this benefit because their peso payment is fixed.
36
mportant financial institution that assists in the initial sale of securities in the primary market
Investment Bank
37
What Financial Markets Do? Financial markets provide the grease that makes many commercial transactions possible such as:
-arranging payment for the sale of product abroad -providing working capital
38
the pse is overseen by ____
15 member BOD, chaired by Jose T. Pardo
39
Share brokers are assembled and bought & sold shares.
TRADING RING
40
When was PSE made
1992. Manila stock exchange and Makati stock exchange
41
National Stock exchange created in 1992 Merger of Manila Stock Exchange and Makati stock exchange. Main index for PSE is the PSEi composed of thirty (30) listed companies with 15 member of board of directors, chaired by Jose T. Pardo
Philippine Stock Exchange
42
Stock Exchange Supplies: Large volumes are possible in these markets because of two things:
ease of settlement Guarantee of trades
43
large volumes are possible in these markets because of two things:
1. ease of settlement 2. guarantee of trades
44
difference between a price at which a share is sold, and that at which it is bought
bid-offer spread
45
Main disadvantage of owning a corporation’s equities rather than its debt:
Equity holder is a residual claimant. The corporation must pay all its debt holders before it pays its equity holders.
46
A recognized stock exchange is recognized by
SEC
47
Two Important Functions of Secondary Markets:
1. They make the financial instruments more liquid. The increased liquidity of these instruments then makes them more desirable and thus easier for the issuing firm to sell in the primary market. 2. They determine the price of the security that the issuing firm sells in the primary market. The higher the security’s price in the security market, the higher will be the price that the issuing firm will receive for a new security in the primary market, hence, the greater amount of capital it can raise. Therefore, conditions in the secondary market are the most relevant corporations issuing securities.
48
Where the sale of securities is said to be made by way of a new issue
PRIMARY MARKET
49
What Financial Markets Do? Stock and bond markets provide an opportunity to earn a return on funds that are not needed immediately, and to accumulate assets that will provide an income in the future
6. Investing
50
the busier ones, generally, have important attributes that smaller markets often lack:
liquidity transparency reliability legal procedures suitable investor protection and regulation low transaction costs
51
admission of securities to dealings on a recognized stock exchange of any incorporated company, central and stage governments, quasi-governmental and other financial institutions/corporations
listing
52
negotiated sale involving a specific buyer
Private Placements
53
the current trading information for each day trading market
market data
54
The forces of change
Technology Deregulation Liberalization Consolidation Globalization
55
claims to share in the net income (income after expenses and taxes) and the assets of a business Equities often make periodic payments (dividends) to their holders and are considered long-term securities – no maturity date Owning a stock means that you own a portion of the firm, thus, have the right to vote on issues important to the firm and to elect its directors
2. Equity Instruments (common stock or ordinary stock)
56
Bonds Stock markets
Financial Markets
57
Meeting place for people, corporations and institutions that either need money or have money to lend or invest
Financial Markets
58
claims to share in the net income (income after expenses and taxes) and the assets of a business Equities often make periodic payments (dividends) to their holders and are considered long-term securities – no maturity date Owning a stock means that you own a portion of the firm, thus, have the right to vote on issues important to the firm and to elect its directors
2. Equity Instruments (common stock or ordinary stock)
59
Function of Financial Markets
getting people together by moving funds from those who have a surplus of funds to those who have a shortage of funds
60
a platform to buy and sell shares in certain listed companies.
Stock Exchange Supplies

Fin Mar (5 decks)

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