Financialinstruments金融工具.ppt

3.FINANCIALMARKETSANDINSTRUMENTS,Financialmarketssyndicatebearsriskassociatedwithunsoldshares,whichtheycannotsellabovetheofferprice.,32,Shelfregistration,Shelfregistrationisageneralpurposeregistrationgivingbroadtermsofthesecuritiestobeissued,gooduptotwoyears,thatallowsthefirmtogetquickapprovalAsingleunderwriteroftenbuystheentireissue.CutsthetimelagfromseveralmonthstoafewdaysCompetitivebidslowertheissuecosts.,33,PrivatePlacement,CorporationscanavoidregisteringwithSECbyplacingthesecuritiesprivatelywithinstitutionalinvestors.Theprivateplacementmarketisabouthalfthesizeofthepublicmarket,excludingbankloans.Attractiveoptionifpublicinvestorsnotespeciallyreceptiveforreasonsofcomplexity.Advantagestocompanyarequickerandeasiertonegotiate,canbecustomtailoredtospecificneedsDisadvantageisthatasunregisteredsecuritiestheycannotbetradedonfinancialmarketslessliquidRule144Anowallowsfortradingofprivatelyplacedsecuritiesamonginstitutionalinvestors.,34,IssueCosts,Forprivatelynegotiatedtransactions,issuecostamountstotheinvestmentbankingfee.Forpublicissues,therearealsolegal,accounting,andprintingfees.Costcomparisons2.2%forstraightdebt.3.8%forconvertiblebonds.7.1%forsecondaryofferings.11%forIPOs.,35,Comparison,36,EfficientMarkets,IssuesinraisingnewcapitalTimingPricingMarketefficiencyiswithreferencetohowquicklypricesincompetitivemarketsrespondtonewinformationEfficientmarketisonewherepricesadjustrapidlytonewinformationandcurrentpricesfullyreflectavailableinformation,37,EfficiencyinDegrees,Amarketisweak-formefficientwhenpricesfullyreflectallinformationaboutpastpricesSemi-strongformefficientwhenpricesfullyreflectallpubliclyavailableinformationstrongformefficientwhenpricesfullyreflectallinformation,publicorprivate.,38,Empiricalevidence-implication,Marketsarenotstrongformefficient.Withlimitedexceptions,marketsaresemi-strongformefficientandhencePubliclyavailableinformationhasnopredictivepowerinrespecttomarketprices.Typicalinvestorsshouldnotexpecttoearnabnormalreturnstradingonpubliclyavailableinformation.Itispointlesstotimethepurchaseorsaleofthefirmssecurities.,39,ConclusionstoDraw,Apartfrommarketsentiment,managerscanuseprivateinformationabouttheirowncompaniesinmakingtimingdecisions.PricingdecisionsinpracticearebasedonMarketvalueFairvaluePricediscoverythrobookbuilding,40,ManagingRisk,RiskisdefinedasthevariabilityofreturnsfromtheexpectedvaluesInfinancialmarketsvolatilityresultsinriskCompaniesusederivativestomanageriskandincentivizemanagers.Derivativesincludeforwards,futures,optionsSocalledastheirvalueisderivedfromthatoftheunderlyingassetswhichcouldbeshares/currency/commodities,41,Forwardcontracts,Youcanbuyinspotmarkettodayforimmediatedeliveryspotcontract.Youcancontracttodayatapredeterminedpriceforfuturedeliveryforwardcontract.Bylockinginapricetoday,youcanavoidpriceriskAnexporterwith1millionreceivablein90days,cansell(animporterwithapayablecanbuy)atapredeterminedrateintheforwardmarketFuturescontractsaresimilartoforwardsexceptthattheyareexchangetraded(whileforwardsarebilateral),42,Optioncontracts,Forwardcontractsareobligationstodeliver/acceptdeliveryatapre-specifiedprice.Optionsarerights,butnotobligationstoeithertakedeliveryortodeliver,atapre-specified(exerciseorstrike)price.CalloptionsconfertherighttobuytheunderlyingsharesatthestrikepricePutoptionsconfertherighttoselltheunderlyingsharesatthestrikepriceTheoptionbuyerpaysapremiumtotheoptionseller(writer)forthisright,43,Optioncontracts,ForacalloptionInthemoney:WhenthespotexceedsthestrikeAtthemoney:Whenthespot=strikeOutofthemoney:WhenspotislessthanstrikeForaputoptionInthemoney:WhenthespotislessthanstrikeAtthemoney:Whenthespot=StrikeOutofthemoney:Whenthespotexceedsstrike,44,ValuingOptions,Intheory,thevalueofanoptiondependsupon(BlackScholesmodel):ThecurrentpriceoftheunderlyingassetTheoptionstimetomaturityTheoptionsstrikepriceTheinterestrateTheexpectedvolatilityontheunderlyingassetButnottheexpectedfuturevalueoftheunderlyingasset,45,