indian share market an overall study guide
DESCRIPTION
A Study GuideTRANSCRIPT
Stock Exchanges
Jobi mathai
S3 MBA
Stock exchanges
Securities refer to legal documents that show either a person’s __________ of a company or _____ to buy shares at specified dates, or he/she has ____ money to a business firm or a government.
ownership
rightlent
A stock exchange is an organised market for the trading of _________.securitie
s
……Ab Ltd.
Function of stock exchanges
To individuals
To business firms
To the economy
As an ___________ channel
Gaining __________
investment protection
Receiving ___________information
Raising _______
Boosting _________
capital
credibility
Raising _______ for the government and public corporations
Fully utilising _________
capital
resources
As an economic ________indicator
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
Process of securities trading
Investor Stockbroker
1. An investor places a _____________ with the stockbroker.market order
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 by buying 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 to the ____________________________________________ for completion on or before the _______ day of transaction.
Automatic Order Matching and Executive System second
Representative
Types of securities
_______: evidence that an investor owns a proportion of a 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 is pooled together to invest in a portfolio that is managed by a fund management company.
Unit trusts/Mutual funds
_______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 does not have to be in proportion to the shareholders’ existing holdings.
Financial institutions involved in issuing shares
An ____________ acts for a company wishing to issue 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
Primary market and secondary market
Primary market
Secondary market
_________ market
It is the market mainly between the ________________ and _____
_________
New issue
issuing institutionpurchaser
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
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.
Factors affecting the prices of shares
Changes in economic and political conditions
The prospect for the ________ and ________
If the prospect of aviation industry is poor, the price of these shares will rise / drop.
industry
company
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.
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
Factors affecting the prices of shares
Changes in economic and political conditions
Political factor
If a country is unstable, its share prices are likely to rise / fall.
Dividend yield = x 100%
Factors affecting the prices of shares
Changes in economic and political conditions
Dividend yield
Annual dividendCurrent share
price
Higher dividend yield Share price rises / falls
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)
Factors affecting the prices of shares
Changes in economic and political conditions
Dividend yield
Price-earning ratio (P/E ratio)
Speculation
presence of speculative activities share price changes
Securities prices
Speculation in securities market
A ____ buys securities, hoping the price will increase. A _____ sells securities, hoping the price will decrease.
bullbear
Bulls buy securities and buyers to be able to sell them at higher price later. The actual owning of securities is called a ____ position.lon
g Some bears sell securities even though they do not have
the securities in hand, the actual owing of 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
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 ________ protectioninvestor
enforcing the rules of disclosure of a listed company’s ______equity