Công cụ tài chính MODULE 1 INTRODUCTION

APC 313 Financial Instruments Lecture One Introduction 29th September 2015 Lecture Outline n  Introduction to unit n  Introduction to financial system n  Case study Unit Leader & Consultation n  n  Unit leader: Securities market; Portfolio management; Risk management Consultation Hours: ¨  Monday ¨  Thursdays 2:00 to 4:00PM 2:00 to 4:00PM n  Email: ttxahvnh@gmail.com n  Mobile: 0918 420 868 Unit Syllabus n  n  n  n  Understand Stock market organization and operation in general Discuss and analyze money market instruments Discuss and analyze capital market instruments Understand derivatives market Lecture Topics n  n  n  n  n  The Financial Systems The money markets: functions and operations The capital markets: functions and operations The stock exchange markets: functions, operations and efficiency The derivatives markets Assessment method n  n  n  This module will be assessed via a single individual assignment of 3000-4000 words The assignment is designed to assess each learning outcomes (1-4) requiring relevant theoretical and empirical analysis and the use of The assignment requires an analysis of secondary financial data including share prices, discussion of relevant theoretical models including models of share price efficiency, and discussion of key issues within a case study financial markets data Written Expression n  There is a high expectation as to the writing quality and content of the written paper n  If different people write their separate sections and then paste them together, it is unlikely to achieve that objective n  Please ensure full care is given to footnoting and the bibliography Research for Assignment n  n  n  Text books may provide some background information, but they are not sufficient in themselves Electronic resources from the Sunderland library and the internet are an important part of the research A simple search on Google will not be sufficient Resources Supporting the Unit n  A special set of readings have been selected in support of the lectures has been made available via library They serve in lieu of a text book n  Additional handouts maybe given in class Indicative reading list Core Texts n  Howells P G A and K Bain (2008) Economics of Money, Banking and Finance, 4th edition, London: FT-Prentice Hall n  F Mishkin (2007) The Economics of Money, Banking and Financial Markets, 8th edition, London: Pearson Addison-Wesley n  Mishkin, F S & Eakins, S G (2005) Financial Markets & Institutions (5th ed.) London: Addison-Wesley 10 Market Efficiency and Real Economy n  (1) Operational efficiency: ¨  Market’s ability to carry out transactions quickly, cheaply and reliably ¨  Help customers n  n  To buy goods and services beyond their current income Postpone consumption or bring it forward ¨  Help the financing of real investment projects – the purchase of machinery, buildings, equipment and so on that facilitates the production of goods and services ¨  Real investments require a large expenditure for which firms usually have to borrow 40 41 Market Efficiency and Real Economy n  (2) Information efficiency n  All information relevant to the valuation of an asset is incorporated in the asset’s price quickly and fully ¨ Future stream of earnings ¨ Level of risk ¨ Discount rate which combines risk-free interest rate and the level of risk n  Assets’ prices are correct, ensuring funds flow to where they are most productive 42 43 Market Efficiency and Real Economy (3) Allocation efficiency n  Firms with low risk, high share prices relative to current dividends can raise fund with low cost of capital => more projects with positive NPV => attract more funds n  Firms with high risk, low share prices relative to current dividends can only raise fund with high cost of capital => less projects with positive NPV => attract less funds 44 Contents Characteristics of a financial system Advantages of using a financial system Market efficiency and the real economy Financial system and economic development 45 Research on Finance and Economic Development n  Schumpeter (1911), Gurley and Shaw (1955) and Hicks (1969): Financial system helps to mobilize saving and investment, promoting growth and policy should encourage the growth of financial system 46 Research on Finance and Economic Development n  McKinnon (1973) and Shaw (1973): More on “Informational efficiency and resource allocation” n  Criticize “financial repression” which was characterized by high levels of government regulation of the financial system, namely high reserve requirements on banks, ceilings on interest rates 47 Research on Finance and Economic Development ¨ High levels of government regulation increases cost of capital ¨ Ceilings on interest rates discourage supply, create excess demand, thus lower level of investment ¨ Ceilings on interest rates hold down the cost of capital, thus directing limited funds to both high and low quality projects => badly affect investment quality n  The policy implication is to promote “financial liberalization” 48 Research on Finance and Economic Development n  Empirical studies on financial repression hypothesis: Association between finance and economic growth where finance refers to the size of financial sector and “liberalization hypothesis” ¨ Data problem ¨ Problem in distinguishing cause and effect 49 Research on Finance and Economic Development ¨ Initiated by King and Levine (1973): mainly focus on banking variables ¨ Demirguc-Kunt and Maksimovic (1998) and Levin and Zervos (1998) confirmed positive link between markets and economic growth 50 Research on Finance and Economic Development n  Dissenting voices ¨ Joseph Stiglitz (2000) had argued that financial liberalization has led to increased instability within financial systems and is responsible for the increased frequency of financial crisis 51 Workshop Provide a brief answer to each of the following questions n  Distinguish between long term and short term financial assets Give examples to illustrate your answer n  Explain what you understand by the term “asymmetric information” Give examples to illustrate your answer How financial markets help to solve the problem of asymmetric information? 52 Workshop n  Explain how the performance of the financial system might affect the process of economic growth Give examples to illustrate your answer n  4.Explain what you understand by the term ”moral hazard” Provide examples relating to financial markets to explain your answer 53 www.themegallery.com ...     29 .15 4   Joint-­‐stock  Commercial  Banks     37   2 71. 411   Joint-­‐venture  and  Foreign  Banks   60   19 .549   Finance  Companies   17   14 . 317   Financial  Leasing  Companies   12   3.650... Thông is a heroin addict On 9 /12 /2008, he came to the bank and borrow VND 70million Immediately, Thông spent VND 10 million buying 11 1 heroin pieces in Vinh city 31 ... 2006, approved machines included the Citizen SR -13 5T, Casio FX82AU, Casio FX82MS, and Sharp EL-735 The Sharp is recommended by the Department 13 Introduction to Financial system Characteristics