BSE and NSE

Stock Exchanges

Jobi mathai

S3 MBA

Stock exchanges

Securities refer to legal documents that show either a person’s __________ of a company or _____ to buy shares at specified dates, or he/she has ____ money to a business firm or a government.

ownership

rightlent

A stock exchange is an organised market for the trading of _________.securitie

s

……Ab Ltd.

Function of stock exchanges

To individuals

To business firms

To the economy

As an ___________ channel

Gaining __________

investment protection

Receiving ___________information

Raising _______

Boosting _________

capital

credibility

Raising _______ for the government and public corporations

Fully utilising _________

capital

resources

As an economic ________indicator

Demand Supply

Features of stock exchanges

Keen / Little competition

______________ determine the pricesMarket forces

_____________ as middlemenStockbrokers

Shares in the market are sold in standardised ____.lots

Market information on the stock exchange is _____.open

Trading on the stock exchange is being __________ to ensure fairness in trading.

monitored

Process of securities trading

Investor Stockbroker

1. An investor places a _____________ with the stockbroker.market order

Process of securities trading

Investor Stockbroker

1. An investor places a _____________ with the stockbroker.market order

3. The representative will then carry out the market order by buying from or selling to other broker representatives.

2. The stockbroker then sends the order to her ______________ who is on the trading floor.representative

4. Details of the transaction are transferred electronically to the ____________________________________________ for completion on or before the _______ day of transaction.

Automatic Order Matching and Executive System second

Representative

Types of securities

_______: evidence that an investor owns a proportion of a companyShares

_________: allow the holder to buy a specified number of shares at a fixed conversion price on or before a given date.

Warrants

______: recognise that a loan has been made to a company or government.Bonds

________________________: investors’ money is pooled together to invest in a portfolio that is managed by a fund management company.

Unit trusts/Mutual funds

_______Placing

Methods of issuing shares

Methods of issuing shares in the stock exchange

_____________________Offer for subscription

______________Offer for sale ___________Rights issue

___________Bonus issue

__________________Consideration issue

____________Introduction

___________Open offer An offer to existing shareholders. It does not have to be in proportion to the shareholders’ existing holdings.

Financial institutions involved in issuing shares

An ____________ acts for a company wishing to issue new shares.

issuing house

Functions of an issuing house

As an ___________: agrees to buy the shares if they are not bought by the public

underwriter

Prepares the ___________ for submission to the HKSAR Government and HKEx.

prospectus

Distributes the prospectus to the public through _____________ and _____.stockbrokers banks

Advertises the public offer

Primary market and secondary market

Primary market

Secondary market

_________ market

It is the market mainly between the ________________ and _____

_________

New issue

issuing institutionpurchaser

It is the market between ________ _________________ and ______

Investors can buy securities that are ______________

existing

already in issue

bulk

Firms can ___________ through issuing securities

raise capital

securities holders

buyers

Factors affecting the prices of shares

Changes in economic and political conditions

General economic conditions

economic conditions

If people expect a good economic performance for a certain region, the investment demand will increase / decrease and share prices are likely to rise / fall.



The prospect for the ________ and ________

If the prospect of aviation industry is poor, the price of these shares will rise / drop.

industry

company



The interest rate

When the bank interest rate is high, the share prices are likely to rise / fall.



The foreign exchange rate

When the foreign exchange rate of a country rises, the share prices are likely to rise / fall.

exchange rate

time

share price

time



Political factor

If a country is unstable, its share prices are likely to rise / fall.

Dividend yield = x 100%



Dividend yield

Annual dividendCurrent share

price

Higher dividend yield Share price rises / falls

P/E ratio = x 100%Current per share earnings



Dividend yield

Current share price

Higher P/E ratio Share price rises / falls

Price-earning ratio (P/E ratio)



Dividend yield

Price-earning ratio (P/E ratio)

Speculation

presence of speculative activities share price changes

Securities prices

Speculation in securities market

A ____ buys securities, hoping the price will increase. A _____ sells securities, hoping the price will decrease.

bullbear

Bulls buy securities and buyers to be able to sell them at higher price later. The actual owning of securities is called a ____ position.lon

g Some bears sell securities even though they do not have

the securities in hand, the actual owing of securities is called a ______ position.short

______________ is a method of speculation that involves the use of borrowed funds.Margin trading

An example of margin trading

The Securities and Futures Ordinance

The monitoring of the securities market

establishing the ______________ of the Securities and Futures Commission and stating its functions and powers

accountability

introducing a simplified ________ mechanism for exchange and clearing house participants

licensing

setting up a flexible _______________ mechanism for securities and futures industry

civil and criminal

setting up plans for ________ protectioninvestor

enforcing the rules of disclosure of a listed company’s ______equity

BSE and NSE

Economy & Finance