金融英语课件 chapter 2
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where the federal funds rate briefly hit 6 per cent - three times the target rate of 2
per cent - as financial institutions scrambled to raise cash. The Fed injected a total of $70bn in liquidity, before the fed
Stocks sink amid Wall St
crisis
• The unprecedented changes on Wall Street - which was also gripped by rising fears about the health of AIG,
the giant insurer - left investors more concerned with preserving returns.
funds rate finally fell back later.
Agenda today
• Stock (common v.s preferred) • Derivatives • Financial instruments in international
markets
Stock
• A share (also referred to as equity shares) of stock represents a share of ownership in a corporation
Forwards
• A transaction in which a seller agrees to deliver a specific commodity to a buyer at some point in the future.
Futures
• Standardized forward contracts
Breaking news
China cuts rates, lowers reserve ratio
• China's central bank Monday cut the cost of bank loans, the first time since 2002, and lowered the proportion of money lenders must have as reserves, the first such move in nine years, to keep the economy from sliding further.
China cuts rates, lowers reserve
ratio
• The 1 percentage point cut from the reserve requirement ratio of 17.5 percent does not apply to the five biggest banks (the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China, the China Construction Bank, the Bank of Communications) and the Postal Savings Bank, the People's Bank of China (PBOC) said on its website.
• Financial assets whose values depend on the values of other assets, such as stocks or bonds. (underlying assets)
Derivatives
• Forward • Futures • Options • And swaps
disadvantages of issuing C.S
• Dilution of ownership • More new shareholders share profit • More costly • Dividends are not tax deductible
Comparison of PS and CS
• A standardized, transferable, exchangetraded contract that requires delivery of a commodity, bond, currency, or stock index, at a specified price, on a specified future date.
Common stock
Features
• Residual value • Dividends not obligated • No maturity/ perpetuity • Control of the firm • Preemptive right
Two type of stock companies
• Publicly held • Privately held
Advantages of issuing C.S
• Not legally bound to pay dividends • No repaid “principal” • More funds to be raised than debt
American depository receipts
• Certificate of foreign stock • Traded in stock market in U.S • Denominated in USD
Foreign debt or Euro-debt
• What is the denomination? Home currency or host country currency
• voting right --- CS • get paid a guaranteed dividend at a pre-
determined interest rate ---PS • priority distribution of the company's assets
Derivatives
• The benchmark lending rate will be lowered by 0.27 percentage point to 7.20 percent from Tuesday.
China cuts rates, lowers reserve ratio
• However, benchmark deposit rates remain unchanged with the one-year rate to be kept at 4.14 percent, a proof that the central bankers are keeping an eye on inflation.
investors sought the safety of cash and government debt following the historic collapse of Lehman Brothers and the emergency sale of Merrill
Lynch to Bank of America.
Stocks sink amid Wall St
crisis
• US stocks suffered their biggest oneday decline on Monday since the market reopened after the terrorist attacks of September 11, 2001, as
• Call options • Put options
Which financial instrument is best?
Financial instruments in international markets
• American depository receipts • Foreign debt • Euro-debt • Euro-equity
Category of stock
• Common • Preferred/preferential
Preferred stock
• A hybrid
Features
• Priority to assets and earnings • Par value • Cumulative dividends • convertibility
Yields on short-dated government debt collapsed, falling far below 1 per
cent, amid frenzied buying
Stocks sink amid Wall St crisis
The Federal Reserve battled a ferocious storm in the overnight money market,
An example
Options
• A right, not an obligation
• Exercise price • Cost (premium) • Spot market price
• European • American
Options
Options
• In the money • Out-of the money
per cent - as financial institutions scrambled to raise cash. The Fed injected a total of $70bn in liquidity, before the fed
Stocks sink amid Wall St
crisis
• The unprecedented changes on Wall Street - which was also gripped by rising fears about the health of AIG,
the giant insurer - left investors more concerned with preserving returns.
funds rate finally fell back later.
Agenda today
• Stock (common v.s preferred) • Derivatives • Financial instruments in international
markets
Stock
• A share (also referred to as equity shares) of stock represents a share of ownership in a corporation
Forwards
• A transaction in which a seller agrees to deliver a specific commodity to a buyer at some point in the future.
Futures
• Standardized forward contracts
Breaking news
China cuts rates, lowers reserve ratio
• China's central bank Monday cut the cost of bank loans, the first time since 2002, and lowered the proportion of money lenders must have as reserves, the first such move in nine years, to keep the economy from sliding further.
China cuts rates, lowers reserve
ratio
• The 1 percentage point cut from the reserve requirement ratio of 17.5 percent does not apply to the five biggest banks (the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China, the China Construction Bank, the Bank of Communications) and the Postal Savings Bank, the People's Bank of China (PBOC) said on its website.
• Financial assets whose values depend on the values of other assets, such as stocks or bonds. (underlying assets)
Derivatives
• Forward • Futures • Options • And swaps
disadvantages of issuing C.S
• Dilution of ownership • More new shareholders share profit • More costly • Dividends are not tax deductible
Comparison of PS and CS
• A standardized, transferable, exchangetraded contract that requires delivery of a commodity, bond, currency, or stock index, at a specified price, on a specified future date.
Common stock
Features
• Residual value • Dividends not obligated • No maturity/ perpetuity • Control of the firm • Preemptive right
Two type of stock companies
• Publicly held • Privately held
Advantages of issuing C.S
• Not legally bound to pay dividends • No repaid “principal” • More funds to be raised than debt
American depository receipts
• Certificate of foreign stock • Traded in stock market in U.S • Denominated in USD
Foreign debt or Euro-debt
• What is the denomination? Home currency or host country currency
• voting right --- CS • get paid a guaranteed dividend at a pre-
determined interest rate ---PS • priority distribution of the company's assets
Derivatives
• The benchmark lending rate will be lowered by 0.27 percentage point to 7.20 percent from Tuesday.
China cuts rates, lowers reserve ratio
• However, benchmark deposit rates remain unchanged with the one-year rate to be kept at 4.14 percent, a proof that the central bankers are keeping an eye on inflation.
investors sought the safety of cash and government debt following the historic collapse of Lehman Brothers and the emergency sale of Merrill
Lynch to Bank of America.
Stocks sink amid Wall St
crisis
• US stocks suffered their biggest oneday decline on Monday since the market reopened after the terrorist attacks of September 11, 2001, as
• Call options • Put options
Which financial instrument is best?
Financial instruments in international markets
• American depository receipts • Foreign debt • Euro-debt • Euro-equity
Category of stock
• Common • Preferred/preferential
Preferred stock
• A hybrid
Features
• Priority to assets and earnings • Par value • Cumulative dividends • convertibility
Yields on short-dated government debt collapsed, falling far below 1 per
cent, amid frenzied buying
Stocks sink amid Wall St crisis
The Federal Reserve battled a ferocious storm in the overnight money market,
An example
Options
• A right, not an obligation
• Exercise price • Cost (premium) • Spot market price
• European • American
Options
Options
• In the money • Out-of the money