金融市场学第四版1、2章英文讲义.doc

Chapter 1 Introduction Types of Assets Tangible Assets Value is based on physical properties Examples include buildings, land, machinery Intangible Assets Claim to future income Examples include various types of financial assets Types of Financial Assets Bank loans Government bonds Corporate bonds Municipal bonds Foreign bond Common stock Preferred stock Foreign stock Debt vs. Equity Debt Instruments Fixed dollar payments Examples include loans, bonds Equity Claims Dollar payment is based on earnings Residual claims Examples include common stock, partnership share Price of Financial Asset and Risk The price or value of a financial asset is equal to the present value of all expected future cash flows. Expected rate of return Risk of expected cash flow (pp3,give present value) Types of Investment Risks Purchasing power risk or inflation risk Default or credit risk Exchange rate or currency risk Role of Financial Assets Transfer funds from surplus units to deficit units. Transfer funds so as to redistribute unavoidable risk associated with cash flows generated from both tangible and intangible assets. (pp5:examples analysis) Key Points You Should Understand Difference between tangible and financial assets Difference between debt and equity Cash flow of a financial asset Three types of risks associated with financial asset Two principal economic functions of financial assets Role of Financial Markets Determine price or required rate of return of asset. Provide liquidity. Reduce transactions costs, which consists of search costs and information costs. (contrast by Chinese textbook) Classification of Financial Markets Debt vs. equity markets Money market vs. capital market Primary vs. secondary market Cash or spot vs. derivatives market Auction vs. over-the-counter vs. intermediated market Financial Market Participants Households Business units Federal, state, and local governments Government agencies Supranationals Regulators Key Points You Should Und