The Sharemarket »

Sharemarket Overview:
Permits the trading of financial assets
In particular the trading of corporate equity (shares)
The share represents a residual claim over the assets of a company
Shares also posses an ownership components (a vote in the control of the company)
The Corporation
The corporation differs from other business forms
–      1. Ownership claims are widespread and easily transferable
–      2. Owners do not affect the day to day running of the business
–      3. Shareholder’s liability is limited to the fully paid-up value of the shares
Advantages of the corporate form
–      Can obtain large amounts of finance …

Functions of Banks »

Functions of Banks
Main activities of banks
–      Financial intermediaries
–      Source of funds
ð  Through active liability management
–      Use of funds is through
ð  The provision of loans to customers
ð  The investment in securities
–      provide a range of other financial services and off-balance sheet (OBS) business
Sources of funds (Bank Deposits)
Banks offer a range of deposit and investment products that very by risk, return, liquidity and cash flow timing
Bank’s liabilities (sources of funds) may be categorised as
–      Current deposits
–      Fixed term deposits
–      Other deposits
–      Certificates of deposit
Current deposits
–      Fund deposited in cheque accounts
–      Highly liquid …

Introduction to Markets »

Financial Systems:
Facilitates the efficient flow of funds between lenders and borrowers via financial instruments
Allows individuals to allocate funds according to current and future consumption
Facilitates the implementation of government monetary policy
Financial Instruments:
Attributes of financial instruments
¨      Return or yield
¨      Risk
¨      Liquidity
¨      Time pattern of cash-flows
Equity
¨      Shares represent an ownership position
¨      An entitlement to share in the profits of the organisation
¨      Equity types
–      Ordinary shares
–      Preference shares
–      Quasi-equity instruments
Debt
¨      Debt instruments represent a contractual claim on the borrower to make specific payments in the form of interest and principal amounts
¨      Debt may be …

Futures Trading Fundamentals and Strategy »

The futures market is an organised exchange in which futures contracts are bought and sold. Futures contracts may be used by hedgers to transfer, to another party, a risk exposure associated with an underlying financial transaction. The ‘other party’ may be a speculator who takes a position in the market based on their expectations about changes in the price of the contract during the period through which they hold the contract.
A hedger will enter into a futures contracts today at a price based on the underlying physical market product. At …

Currency Valuation and Further FX Strategy, Foreign Exchange (FOREX, FX), Currency Markets Strategy »

An ‘exchange rate’ is the price of one currency in terms of another currency. The price of the currency is determined by the demand for and the supply of that currency in the FX market. Any change in the factors that determine the demand and supply will result in a change in the exchange rate. Of the theories advanced to explain the exchange rate, and changes in the equilibrium rate, the purchasing power parity (PPP) hypothesis is the longest standing. Under the PPP hypothesis, countries with relatively higher inflation rates …