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ii) Financial Products. 7) Stock pg. 74. Basic Stock Analysis. What is a stock ? A stock is a share of ___________ of a Company As the owner of a stock you have a claim on the company’s assets and _________. Share Certificates-. What does each share certificate represent ?

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ii financial products

ii)Financial Products

7) Stock pg. 74

basic stock analysis
Basic Stock Analysis
  • What is a stock ?

A stock is a share of ___________ of a Company

  • As the owner of a stock you have a claim on the company’s assets and _________
share certificates
Share Certificates-
  • What does each share certificate represent ?
  • We can say share certificates represent ownership of a number of stocks or shares
  • In the example in the video what is mentioned.
roe vs eps
  • ROE is a measure of how efficient a company is at generating profits. It measures a company’s net income as a percentage of it’s __________ _____________
  • EPS is an indicator of a company's profitability.
eps pg 74
EPS pg 74.

Is a measure of a Company’s profit.

How is it calculated ?

EPS = Profit – Dividends

Outstanding Shares

What are Outstanding shares ? Shares currently

owned by Shareholders.

lets look at two companies eps
Lets look at two Companies EPS
  • COMPANY A: PROFIT $1 000 000
  • DIVIDENDS $ 200 000
  • COMPANY B: PROFIT $ 2 000 000
  • DIVIDENDS $ 200 000
  • Can you work out the EPS for these company ?- Who can work it out first ?
company a vs b analysis
Company A vs. B analysis
  • We can see that Company A reported a higher EPS ($8) vs. Company B ($6) even though company B reported twice the profits of A.
  • We can use EPS to _________ratios that will help __________ two companies to each other.
  • This calculation is used along with others in deciding on a company to invest in.
two types of dividends pg 74
TWO types of Dividends pg 74
  • Dividends come in two types:
  • 1. Fixed and 2. Variable.
  • What is the difference ?
  • Dividends that pay a fixed rate go to owners of Preferred Stockwhereas dividends that pay a variable rate go to Common Stock holders.
why do companies issue preferred stock pg 74
Why do companies issue preferred stock ? pg 74
  • Usually because their investors demand it.
  • Simply, preferred Stock is stock which is “preferred” over common stock because;
  • Does anybody know why it is preferred ?
  • The answer is in the last paragraph of pg 74
preferred stock is a safer claim against a firm
Preferred stock is a safer claim against a firm.
  • preferred stock may be entitled to dividends before common stock;
  • preferred stock holders may have special voting rights at shareholders meetings
2 stock exchange pg 76
2) Stock Exchange pg 76
  • p76 : 「定義」について
  • "Stock Exchange is a voluntary organization...."
  • These days the stock exchanges in the developed countries are mainly stock corporations (limited companies).
  • Therefore they are not voluntary organizations any more.
  • In Japan such a structural change occurred in May, 2000, when the Securities and Exchange Act was changed.
primary vs secondary markets
Primary vs. Secondary Markets
  • The Primary Market deals with the issuance of new securities.
  • It is where new securities (an IPO) for example are sold for the first time.
  • Does anybody know of any examples of recent or upcoming IPO’s ?
primary vs secondary markets cont
Primary vs. Secondary Markets cont.
  • The Secondary market is the place where previously issued securities are bought and sold.
  • The NYSE and the TSE are big exchanges and examples of the secondary market.
secondary market mergers
Secondary Market Mergers
  • The proposed merger between the TSE and the OSE.
  • Will create Japan’s largest exchange group and strengthen the TSE’s position as the third largest in the world by market capitalization of company listings.
4 trading pg 80
4) Trading pg 80
  • Lets shadow this extract.
  • What are some of the popular day trading platforms in Japan?
  • Volatility increased by more people speculating. (Speculation)
8 bond pg 86
8) Bond pg 86
  • Discussion on this material and Bond Basics.
  • Q and A
  • What does a bond represent ?
  • _____________________
  • Who issues bonds and why ?
  • _____________________
  • Lets have a look at the key differences between Stocks and Bonds. (from 37 seconds)
  • http://www.investopedia.com/video/play/stocks-versus-bonds#axzz1kLZl7LpG
different types of bonds pg 90
Different types of Bonds pg. 90
  • Government Bonds – What is the coupon on the 10year JGB approximately ?
  • Corporate bonds/ Municipal Bonds and Junk Bonds
  • Please ask a question on this short extract.
5 rating
5) Rating -
  • What are the three major Credit Ratings Agencies?
  • Can anybody list them ?
  • The downgrade stripping _________ of it’s triple A or AAA was announced on Friday the 13th.
5 ratings continued
5)Ratings continued
  • Institutional and individual investors rely on ratings agencies and their in-depth research to make investment decisions.
  • There is currently a lot of debate about CRA’s.
  • Good investment firms will not rely solely on the bond rating agency's rating and will supplement their research with their own in-house research department.
9 foreign exchange pg 98
9) Foreign Exchange pg. 98
  • Foreign Exchange (FX) services use a global currency __________to provide both business, and private clients with added value when exchanging currencies, and transferring money abroad.
  • Foreign currency hedges are often used by ___________and ______________ to limit exchange rate risk. (see forward contracts pg 104)
10 derivatives pg 110
10) Derivatives pg. 110
  • Futures contracts : - are ___________between two parties to buy or sell an asset at a predetermined future date and price.
  • Derivatives can protect producers and suppliers from_________________
  • Values depend on the prices of other more basic variables- (This is referred to as the underlying) – any examples ? CDS, MBS
5 hedge pg 118
5) Hedge pg. 118
  • Please separate the definitions of Hedge on pg. 118 into two separate pieces.
  • 1.Any combination of positions in securities and options in which one position tends to reduce the risk of another;
  • 2. any strategy used to offset investment risk.
arbitrage and leverage
Arbitrage and Leverage
  • Two concepts and keywords you should try to remember.
  • Concept of Arbitrage
  • Arbitrage is defined as the ___________of securities on one market for immediate ____________on another market in order to profit from a price__________. This results in immediate risk-free __________. Concept of Leverage
  • Leverage is a general term for any technique to __________gains and losses. Common ways to use leverage are __________ money, buying fixed assets and using derivatives