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8/12/2019 Stock Exchanges Jobi 03 110202115758 Phpapp02
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Stock Exchanges
Jobi mathai
S3 MBA
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Stock exchanges
Securitiesrefer to legal documents that show eithera persons__________of a company or_____to
buy shares at specified dates, or he/she has____
money to a business firm or a government.
ownership right
lent
A stock exchangeis an organised market for the trading
of_________.securities
Ab Ltd.
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Function of stock exchanges
To individuals
To businessfirms
To the economy
As an___________channelGaining__________
investmentprotection
Receiving___________information
Raising_______
Boosting_________
capitalcredibility
Raising_______ for the government
and public corporations
Fully utilising_________
capital
resources
As an economic________indicator
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Demand Supply
Features of stock exchanges
Keen / Little competition
______________determine the pricesMarket forces
_____________as middlemenStockbrokers
Shares in the market are sold in standardised____.lots
Market information on the stock exchange is_____.open
Trading on the stock exchange is being__________to
ensure fairness in trading.
monitored
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Process of securities trading
Investor Stockbroker
1. An investor places a_____________with the stockbroker.market order
3. The representative will then carry out the market order bybuying from or selling to other broker representatives.
2. The stockbroker then sends the order to her______________who is on the trading floor.representative
4. Details of the transaction are transferred electronically tothe____________________________________________for completion on or before the_______day of transaction.
Automatic Order Matching and Executive Systemsecond
Representative
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Types of securities
_______: evidence that an investor owns a proportion ofa companyShares
_________: allow the holder to buy a specified number
of shares at a fixed conversion price on or before a given
date.
Warrants
______: recognise that a loan has been made to a
company or government.
Bonds
________________________: investors money ispooled together to invest in a portfolio that is managed
by a fund management company.
Unit trusts/Mutual funds
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_______Placing
Methods of issuing shares
Methods of issuing shares in the stock exchange
_____________________Offer for subscription
______________Offer for sale
___________Rights issue
___________Bonus issue
__________________Consideration issue
____________Introduction
___________Open offer An offer to existing shareholders. It doesnot have to be in proportion to the
shareholders existing holdings.
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Financial institutions involved in issuing shares
An____________acts for a company wishing toissue new shares.issuing house
Functions of an issuing house
As an___________: agrees to buy the shares if they
are not bought by the public
underwriter
Prepares the___________for submission to the
HKSAR Government and HKEx.
prospectus
Distributes the prospectus to the public through_____________and_____.stockbrokers banks
Advertises the public offer
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Primary market and secondary market
Primary market
Secondary market
_________marketIt is the market mainly between the
________________ and_____
_________
New issue
issuing institution
purchaser
It is the market between________
_________________ and ______
Investors can buy securities that are
______________
existing
already in issue
bulk
Firms can___________ through
issuing securities
raise capital
securities holders buyers
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Factors affecting the prices of shares
Changes in economic and political conditions
General economic conditions
economic
conditions
If people expect a good economic
performance for a certain region,
the investment demand will
increase / decrease and share
prices are likely to rise / fall.
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Factors affecting the prices of shares
Changes in economic and political conditions
The prospect for the________and________
If the prospect of aviation industryis poor, the price of these shares
will rise / drop.
industry company
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Factors affecting the prices of shares
Changes in economic and political conditions
The interest rate
When the bank interest rate is high, the share
prices are likely to rise / fall.
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Factors affecting the prices of shares
Changes in economic and political conditions
The foreign exchange rate
When the foreign exchange rate of a country
rises, the share prices are likely to rise / fall.
exchange rate
time
share price
time
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Factors affecting the prices of shares
Changes in economic and political conditions
Political factor
If a country is unstable, itsshare prices are likely to rise /
fall.
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P/E ratio = x 100%Current per share earnings
Factors affecting the prices of shares
Changes in economic and political conditions
Dividend yield
Current share price
Higher P/E ratio Share price rises / falls
Price-earning ratio (P/E ratio)
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Factors affecting the prices of shares
Changes in economic and political conditions
Dividend yield
Price-earning ratio (P/E ratio)
Speculation
presence of speculative activitiesshare price changes
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Securitiesprices
Speculation in securities market
A____buys securities, hoping the price will increase.
A_____sells securities, hoping the price will decrease.
bull
bear
Bullsbuy securities and buyers to be able to sell them
at higher price later. The actual owningof securities is
called a____position.long
Somebearssell securities even though they do not have
the securities in hand, the actual owingof securities is
called a______position.short
______________is a method of speculation that
involves the use of borrowed funds.
Margin trading
An example of margin trading
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The Securities and Futures Ordinance
The monitoring of the securities market
establishing the______________ of the Securities and
Futures Commission and stating its functions and powers
accountability
introducing a simplified________ mechanism for
exchange and clearing house participants
licensing
setting up a flexible_______________ mechanism for
securities and futures industry
civil and criminal
setting up plans for________
protectioninvestorenforcing the rules of disclosure of a listed companys
______equity
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