Copyright © 2000 Addison Wesley Longman Slide #21-1 Chapter Twenty One SECURITIES MARKETS AND...

Copyright © 2000 Addison Wesley Longman Slide #21-1

Chapter Twenty One

SECURITIES MARKETS AND FIRMS


Underwriting Stocks and BondsGiving Advice

When to offer?At what price?

Filing DocumentsSECRegistration statementProspectus

UnderwritingSyndicate

Marketing OutcomesFully subscribed UndersubscribedOversubscribed

Best Efforts


Ten Largest Underwriters in the U.S.


Securities Brokers and DealersBrokerage Service

Securities Orders Market OrderLimit Order

Other ServicesMargin Credit

Full-Service BrokersDiscount Brokers

Securities DealersMarket Makers


Types of Investment Funds

Balanced FundsBond FundsValue FundsGrowth FundsGrowth and Income FundsIndex FundsMoney Market Mutual Funds


Mutual Funds on the Rise


Distribution of Mutual Fund Net Assets by Type of Fund


Household Ownership of Mutual Funds


Fee Structure of Investment Funds

Open-End FundClosed-End Fund

Load FundsNo-Load Funds


Calculating a Mutual Fund’s Net Asset Value

Net Asset Value (NAV)Definition: Total value of the mutual fund’s stocks,

bonds, cash, and other assets minus any liabilities such as accrued fees, divided by the number of shares outstanding.

Stocks $35,000,000Bonds $15,000,000Cash $3,000,000

Total value of assets $53,000,000Liabilities -$800,000

Net worth $52,200,000Outstanding shares 15 millionNAV = $52,200,000/15,000,000 = $3.48


Hedge Funds1. Take advantage of unusual spreads between security prices2. Often highly leveraged 3. Relatively unregulated

Copyright © 2000 Addison Wesley Longman Slide #21-1 Chapter Twenty One SECURITIES MARKETS AND...

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