Chapter 1 - Introduction
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Budapest Stock Exchange Ltd. Spread Product List
BUDAPEST STOCK EXCHANGE LTD. SPREAD PRODUCT LIST Designation of the Product: BUX spread Size of the Product: BUX * HUF 10 Price setting: The difference between the short BUX futures value of the spread product and the long BUX futures value of the spread product Price Interval: 0.50 index points. Value of the price interval: HUF 5 Expiration months used as a basis for a) the next June and December; the difference: b) from among the months of the March, June, September, December cycle, the two shortest c) the short December and the long December Opening Day: On the first common Stock Exchange Day of the two Stock Exchange Products underlying the Spread Product, when the Spread Product consisting of the two Stock Exchange Products meets one of the conditions set in the item “Expiration months used as a basis for the difference” these will be automatically opened. Closing Day: The Closing Day of any of the two products underlying products of the spread product. Transaction Unit: 1 contract First Trading Day: From among the “Expiration months used as a basis for the difference”, for the spread between the shorter December and the longer December: October 25, 2000. From among the “Expiration months used as a basis for the difference” other than the above-listed: December 19, 2000. Designation of the Product: Magyar Telekom share spread Size of the Product: Magyar Telekom shares to the aggregated nominal value of HUF 100,000 Price setting: The difference between the price of the short share futures underlying the spread product and the price -
3. VALUATION of BONDS and STOCK Investors Corporation
3. VALUATION OF BONDS AND STOCK Objectives: After reading this chapter, you should be able to: 1. Understand the role of stocks and bonds in the financial markets. 2. Calculate value of a bond and a share of stock using proper formulas. 3.1 Acquisition of Capital Corporations, big and small, need capital to do their business. The investors provide the capital to a corporation. A company may need a new factory to manufacture its products, or an airline a few more planes to expand into new territory. The firm acquires the money needed to build the factory or to buy the new planes from investors. The investors, of course, want a return on their investment. Therefore, we may visualize the relationship between the corporation and the investors as follows: Capital Investors Corporation Return on investment Fig. 3.1: The relationship between the investors and a corporation. Capital comes in two forms: debt capital and equity capital. To raise debt capital the companies sell bonds to the public, and to raise equity capital the corporation sells the stock of the company. Both stock and bonds are financial instruments and they have a certain intrinsic value. Instead of selling directly to the public, a corporation usually sells its stock and bonds through an intermediary. An investment bank acts as an agent between the corporation and the public. Also known as underwriters, they raise the capital for a firm and charge a fee for their services. The underwriters may sell $100 million worth of bonds to the public, but deliver only $95 million to the issuing corporation. -
Reverse Stock Split Faq
REVERSE STOCK SPLIT FAQ 1 What is a reverse stock split? A reverse stock split involves replacing, by exchange, a certain number of old shares (in the present case, 20) for one new share, without altering the amount of the company's capital. In practice such an operation creates the following mechanical effects: - the number of new shares in circulation on the market is reduced proportionally to the exchange ratio (several old shares are transformed into one new share); - the par value, and as a consequence, the market price, of each new share are raised proportionally to the exchange ratio. What is the goal of this reverse stock split? The reverse stock split forms part of Soitec’s desire to support its renewed profitable growth momentum, having refocused on its core electronics business. Moreover, the reverse stock split may reduce the volatility of the price of Soitec share caused by its current low price level. What is the proposed exchange ratio for this reverse stock split? The exchange ratio is 1 for 20. In other words, one new share with par value of €2.00 will be exchanged for 20 old shares with par value of €0.10. Why was this 1:20 ratio chosen? This exchange ratio has been chosen for the purpose of positioning the new shares in the average of the values of the shares listed on Euronext. When will the reverse stock split be effective? In accordance with the notice published in the Bulletin des Annonces Légales Obligatoires on 23 December 2016, the reverse stock split will take effect on 8 February 2017, i.e. -
Zsolt Katona Is the New CEO of the Budapest Stock Exchange
Zsolt Katona is the new CEO of the Budapest Stock Exchange Budapest, 10 May 2012 The Board of Directors of the Budapest Stock Exchange appointed Zsolt Katona to be the new Chief Executive Officer of the Budapest Stock Exchange from 15 May 2012. He is a professional with over two decades of executive experience in the financial and the stock exchange fields. He started his career over 20 years ago at one of the founding broker firms of the then reawakening BSE and has been connected to the Stock Exchange by many links ever since. He has been directing the investment services unit of the ING Group in different positions in the past 17 years while also filling several positions related to the Hungarian stock exchange and the capital market in the meantime. He was a member of the Supervisory Board of the BSE between 2002 and 2011, including a 3-year period when he was the Chairman of the BSE Supervisory Board, and he was also a member of the Supervisory Board of the Central Clearing House and Depository (KELER) between 2003 and 2004. In the last one and a half years, he has been participating in the work of the Consultation Body of the BSE, the task of which was to co-ordinate and harmonise interests in relation to the projected replacement of the trading system of the BSE. In connection with his appointment, Zsolt Katona said: “I made my first stock exchange deals in the “good old days”, at the beginning of the 90's, at the open-outcry trading floor in Váci Street, so my ties to the BSE do really go back a long way. -
Ladies of the Ticker
By George Robb During the late 19th century, a growing number of women were finding employ- ment in banking and insurance, but not on Wall Street. Probably no area of Amer- ican finance offered fewer job opportuni- ties to women than stock broking. In her 1863 survey, The Employments of Women, Virginia Penny, who was usually eager to promote new fields of employment for women, noted with approval that there were no women stockbrokers in the United States. Penny argued that “women could not very well conduct the busi- ness without having to mix promiscuously with men on the street, and stop and talk to them in the most public places; and the delicacy of woman would forbid that.” The radical feminist Victoria Woodhull did not let delicacy stand in her way when she and her sister opened a brokerage house near Wall Street in 1870, but she paid a heavy price for her audacity. The scandals which eventually drove Wood- hull out of business and out of the country cast a long shadow over other women’s careers as brokers. Histories of Wall Street rarely mention women brokers at all. They might note Victoria Woodhull’s distinction as the nation’s first female stockbroker, but they don’t discuss the subject again until they reach the 1960s. This neglect is unfortu- nate, as it has left generations of pioneering Wall Street women hidden from history. These extraordinary women struggled to establish themselves professionally and to overcome chauvinistic prejudice that a career in finance was unfeminine. Ladies When Mrs. M.E. -
Claranova Reverse Stock Split
Claranova Reverse Stock Split FAQ CLARANOVA French limited liability company with a Board of Directors (Société anonyme à Conseil d’administration) with a share capital of €39,442,878.80 Head office: 89/91 Boulevard National – Immeuble Vision Défense – 92250 La Garenne-Colombes RCS Nanterre 329 764 625 1 Reverse stock split key dates - Start date of reverse stock split transactions: July 1, 2019 - Deadline for purchasing or selling existing fractional shares: July 31, 2019 - Delisting date of old shares: July 31, 2019 at market close - Effective date of the reverse stock split (and listing date of the new shares): August 1, 2019 - Disposal date of fractional shares performed automatically by account holder financial intermediaries: August 1, 2019 - Distribution by account holder financial intermediaries of the proceeds from the disposal of fractional shares: within 30 days of August 1, 2019 1. What is a reverse stock split? A reverse stock split consists in exchanging several existing shares for one new share, without changing the total amount of the Company’s share capital. In practice, this transaction has the following impacts: - the number of shares outstanding in the market is reduced in proportion to the exchange parity, or divided by ten in Claranova’s case; - the par value is increased in proportion to the exchange parity; - consequently, the individual share price is also increased in proportion to the exchange parity or multiplied by ten in Claranova’s case. 2. What is the objective of the Claranova reverse stock split? The reverse stock split is part of measures to support improved Claranova stock market performance, in line with the Company’s new profitable growth momentum, ambitions and outlook. -
Speculation and Hedging
LIBRARY OF THE MASSACHUSETTS INSTITUTE OF TECHNOLOGY ALFRED P. SLOAN SCHOOL OF MANAGEMENT SPECULATION AND HEDGING 262-67 Paul H. Cootner MASSACHUSETTS INSTITUTE OF TECHNOLOGY 50 MEMORIAL DRIVE CAMBRIDGE, MASSACHUSETTS 02139 " SPECITLATION AND HEDGING 262-67 Paul H. Cootner This paper is a revised version of a paper delivered at the Food Research Institute of Stanford University Symposium on the "Price Effects of Speculation. The research in this paper was partially supported by a Ford Foundation Grant to the M.I.T. Sloan School of Management. H-VH JUN 26 1967 I. I. r. LIBKAKltS The study of futures markets has been hampered by an inadequate under- standing of the motivations of market participants. As far as speculators are concerned, their motives are easy to interpret: they buy because they expect prices to rise: they sell because they expect prices to fall. Anal- ysts may differ about the rationality of speculators, their foresight, or the shape of their utility functions, and these differences of opinion are both important and extensive, but there is little recorded difference of opinion on this central issue of motivation. The theory of hedging, on the other hand, has been very poorly developed. Until Holbrook Working's (1953) paper, the conventional description of hedging in the economics literature was extremely oversimplified and in fact, demon- strably incorrect. Since then Lester Telser (1953) and Hendrik Houthakker (1959) have taken a substantially correct view of hedging. The pre-Working view has maintained itself partly perhaps because of the inertia of established opinion, and partly because of general ignorance about the role of futures markets. -
What Drives Index Options Exposures?* Timothy Johnson1, Mo Liang2, and Yun Liu1
Review of Finance, 2016, 1–33 doi: 10.1093/rof/rfw061 What Drives Index Options Exposures?* Timothy Johnson1, Mo Liang2, and Yun Liu1 1University of Illinois at Urbana-Champaign and 2School of Finance, Renmin University of China Abstract 5 This paper documents the history of aggregate positions in US index options and in- vestigates the driving factors behind use of this class of derivatives. We construct several measures of the magnitude of the market and characterize their level, trend, and covariates. Measured in terms of volatility exposure, the market is economically small, but it embeds a significant latent exposure to large price changes. Out-of-the- 10 money puts are the dominant component of open positions. Variation in options use is well described by a stochastic trend driven by equity market activity and a sig- nificant negative response to increases in risk. Using a rich collection of uncertainty proxies, we distinguish distinct responses to exogenous macroeconomic risk, risk aversion, differences of opinion, and disaster risk. The results are consistent with 15 the view that the primary function of index options is the transfer of unspanned crash risk. JEL classification: G12, N22 Keywords: Index options, Quantities, Derivatives risk 20 1. Introduction Options on the market portfolio play a key role in capturing investor perception of sys- tematic risk. As such, these instruments are the object of extensive study by both aca- demics and practitioners. An enormous literature is concerned with modeling the prices and returns of these options and analyzing their implications for aggregate risk, prefer- 25 ences, and beliefs. Yet, perhaps surprisingly, almost no literature has investigated basic facts about quantities in this market. -
Derivative Securities
2. DERIVATIVE SECURITIES Objectives: After reading this chapter, you will 1. Understand the reason for trading options. 2. Know the basic terminology of options. 2.1 Derivative Securities A derivative security is a financial instrument whose value depends upon the value of another asset. The main types of derivatives are futures, forwards, options, and swaps. An example of a derivative security is a convertible bond. Such a bond, at the discretion of the bondholder, may be converted into a fixed number of shares of the stock of the issuing corporation. The value of a convertible bond depends upon the value of the underlying stock, and thus, it is a derivative security. An investor would like to buy such a bond because he can make money if the stock market rises. The stock price, and hence the bond value, will rise. If the stock market falls, he can still make money by earning interest on the convertible bond. Another derivative security is a forward contract. Suppose you have decided to buy an ounce of gold for investment purposes. The price of gold for immediate delivery is, say, $345 an ounce. You would like to hold this gold for a year and then sell it at the prevailing rates. One possibility is to pay $345 to a seller and get immediate physical possession of the gold, hold it for a year, and then sell it. If the price of gold a year from now is $370 an ounce, you have clearly made a profit of $25. That is not the only way to invest in gold. -
Short-Term and Long-Term Market Inefficiencies and Their Implications1 Charles H
Short-Term and Long-Term Market Inefficiencies and Their Implications1 Charles H. Wang, Ph.D. "In the long term, we are all dead.” ---Keynes I. About Efficient Market Hypothesis: a. Thesis "Do we know that financial markets are efficient?" Since the summary work by Fama (1970) decades ago, this debate remains contentious but during the process yields in-depth knowledge on how financial markets work. In a sequel work in 1991, Fama concluded, "In brief, the new work says that returns are predictable from past returns, dividend yields, and various term-structure variables. The new tests thus reject the old market efficiency-constant expected return model that seemed to do well in the early work." However, the mounting evidence of stock market anomalies and return predictabilities doesn't stop people from questioning the validity of active portfolio management and change the heart of hardcore efficient market believers. Any empirical studies have to simplify the complicated world of financial markets and impose one form of valuation model or another. To further complicate the matter, we are dealing with an open system with countless variables and players in an evolving world bestow on this issue an ever-changing nature. On the other hand, the ways that different kinds of efficient market hypotheses are set up (weak form, semi-strong form, strong form, and specific formulations) make refuting them beyond statistical doubt an arduous if not impossible task. The naiveté of null hypothesis and the high threshold of rejecting it are strongly in favor of the so-called null hypothesis of market efficiency instead of alternative hypotheses like "stock returns are predictable in such and such a fashion and volatilities are clustering with the expected returns changing over time." For example, Poterba and Summers (1988) show that for most tests of random walk hypothesis, the Type II error rate would be between 0.85 and 0.95 if the Type I error rate were set at the conventional 0.05 level. -
Derivatives: a Twenty-First Century Understanding Timothy E
Loyola University Chicago Law Journal Volume 43 Article 3 Issue 1 Fall 2011 2011 Derivatives: A Twenty-First Century Understanding Timothy E. Lynch University of Missouri-Kansas City School of Law Follow this and additional works at: http://lawecommons.luc.edu/luclj Part of the Banking and Finance Law Commons Recommended Citation Timothy E. Lynch, Derivatives: A Twenty-First Century Understanding, 43 Loy. U. Chi. L. J. 1 (2011). Available at: http://lawecommons.luc.edu/luclj/vol43/iss1/3 This Article is brought to you for free and open access by LAW eCommons. It has been accepted for inclusion in Loyola University Chicago Law Journal by an authorized administrator of LAW eCommons. For more information, please contact [email protected]. Derivatives: A Twenty-First Century Understanding Timothy E. Lynch* Derivatives are commonly defined as some variationof the following: financial instruments whose value is derivedfrom the performance of a secondary source such as an underlying bond, commodity, or index. This definition is both over-inclusive and under-inclusive. Thus, not surprisingly, even many policy makers, regulators, and legal analysts misunderstand them. It is important for interested parties such as policy makers to understand derivatives because the types and uses of derivatives have exploded in the last few decades and because these financial instruments can provide both social benefits and cause social harms. This Article presents a framework for understanding modern derivatives by identifying the characteristicsthat all derivatives share. All derivatives are contracts between two counterparties in which the payoffs to andfrom each counterparty depend on the outcome of one or more extrinsic, future, uncertain event or metric and in which each counterparty expects (or takes) such outcome to be opposite to that expected (or taken) by the other counterparty. -
Broker-Dealer Records and Retention Chart (Document)
Broker-Dealer Concepts Broker-Dealer Record Retention Chart Published by the Broker-Dealer & Investment Management Regulation Group April 2016 Preservation of Records and Reports Pursuant to Rules 17a-3 and 17a-4 of the Securities Exchange Act of 1934 Time Period Report or Type of Report or Record to be Maintained Record Must be Maintained All corporate documents, including but not limited to articles of incorporation or charter, minute books, stock certificate Life of the Company books, Form BD and all amendments thereto. (Rule 17a-4(d)) “Notice Pursuant to Rule 17f-2,” disclosing why certain partners, directors, officers and/or employees from your company are Life of the Company exempt from fingerprinting requirements. Statement must include: > name of your organization and that you are a broker-dealer; > identify all persons who have satisfied the fingerprinting requirements of Section 17(f)(2); > identify all persons claimed to be exempt from the fingerprinting requirements of Section 17(f)(2); > generic description of duties of persons described above, and the nature of their departments and divisions; and > description of security measures utilized to ensure only those persons who have complied with the fingerprinting requirements or who are exempt, have access to the keeping, handling or processing of securities, monies, or the original books and records relating thereto. (Rule 17f-2(e)) Blotters (or other records of original entry) containing an itemized daily record of all purchases and sales of securities, all 6 years, 2 years in receipts and deliveries of securities (including certificate numbers), all receipts and disbursements of cash, and all other easily accessible place debits and credits.