The many roles of financial markets Fatih Ayık
-
Upload
fatih2323 -
Category
Economy & Finance
-
view
246 -
download
0
Transcript of The many roles of financial markets Fatih Ayık
![Page 1: The many roles of financial markets Fatih Ayık](https://reader033.fdocuments.us/reader033/viewer/2022060200/559973701a28abe47e8b46e1/html5/thumbnails/1.jpg)
FATİH AYIK
![Page 2: The many roles of financial markets Fatih Ayık](https://reader033.fdocuments.us/reader033/viewer/2022060200/559973701a28abe47e8b46e1/html5/thumbnails/2.jpg)
OutlineOutline
IntroductionChoice of ConsumptionThe Role of ManagementFinancial Markets and Information
![Page 3: The many roles of financial markets Fatih Ayık](https://reader033.fdocuments.us/reader033/viewer/2022060200/559973701a28abe47e8b46e1/html5/thumbnails/3.jpg)
IntroductionIntroduction
The Growth of Financial MarketsThe Share of Banks FallSecurities Markets and Financial
Derivatives increase The role of banks in the economic
system
![Page 4: The many roles of financial markets Fatih Ayık](https://reader033.fdocuments.us/reader033/viewer/2022060200/559973701a28abe47e8b46e1/html5/thumbnails/4.jpg)
IntroductionIntroduction Securities markets criticized: they are driven by speculation they consume too many
resources
Financial markets for effective allocation
![Page 5: The many roles of financial markets Fatih Ayık](https://reader033.fdocuments.us/reader033/viewer/2022060200/559973701a28abe47e8b46e1/html5/thumbnails/5.jpg)
Choice of ConsumptionChoice of Consumption Financial markets:Enable to consume and to exchangeAllow efficient risk-sharing
Two types of risks:DiversifiableNondiversifiable
![Page 6: The many roles of financial markets Fatih Ayık](https://reader033.fdocuments.us/reader033/viewer/2022060200/559973701a28abe47e8b46e1/html5/thumbnails/6.jpg)
Choice of ConsumptionChoice of Consumption
Diversifiable risk can be eliminated
Transfer of non-diversifiable risk
Financial markets offer an array of financial instruments
![Page 7: The many roles of financial markets Fatih Ayık](https://reader033.fdocuments.us/reader033/viewer/2022060200/559973701a28abe47e8b46e1/html5/thumbnails/7.jpg)
Choice of ConsumptionChoice of Consumption For example: Extremely risk-averse investors may
invest to risk-free securities.More risk tolerant investors may
invest risky stocks.Intermediate risk preferences may
choose a conbination of bonds and stocks.
![Page 8: The many roles of financial markets Fatih Ayık](https://reader033.fdocuments.us/reader033/viewer/2022060200/559973701a28abe47e8b46e1/html5/thumbnails/8.jpg)
The Role of ManagementThe Role of Management Financial markets enable
seperation of ownership A professional maneger can be
delegated Managers do not need:
to know anything to consult shareholders’ own
tastes
![Page 9: The many roles of financial markets Fatih Ayık](https://reader033.fdocuments.us/reader033/viewer/2022060200/559973701a28abe47e8b46e1/html5/thumbnails/9.jpg)
The Role of ManagementThe Role of Management Managers need :
to follow only one objective to invest in projects
![Page 10: The many roles of financial markets Fatih Ayık](https://reader033.fdocuments.us/reader033/viewer/2022060200/559973701a28abe47e8b46e1/html5/thumbnails/10.jpg)
The Role of ManagementThe Role of Management
Managers’ objective:
is investing in positive net present value projects.
maximizes the market value is in the best interest
![Page 11: The many roles of financial markets Fatih Ayık](https://reader033.fdocuments.us/reader033/viewer/2022060200/559973701a28abe47e8b46e1/html5/thumbnails/11.jpg)
Financial Markets and Financial Markets and InformationInformation
The stock market ; aggregates the diverse opinions of market participants conveys how much the equity of a company is worth leads to the more efficent use of assets enables poor management to be disciplined
![Page 12: The many roles of financial markets Fatih Ayık](https://reader033.fdocuments.us/reader033/viewer/2022060200/559973701a28abe47e8b46e1/html5/thumbnails/12.jpg)
Financial Markets and Financial Markets and InformationInformation
Stock price may respond in two ways ; Negative way Positive way
Stock price is negative: re-examine calculations re-consider plan
![Page 13: The many roles of financial markets Fatih Ayık](https://reader033.fdocuments.us/reader033/viewer/2022060200/559973701a28abe47e8b46e1/html5/thumbnails/13.jpg)
![Page 14: The many roles of financial markets Fatih Ayık](https://reader033.fdocuments.us/reader033/viewer/2022060200/559973701a28abe47e8b46e1/html5/thumbnails/14.jpg)
FinancialFinancial Markets and Markets and InformationInformation
Monitoring needs to be done by one party
Duplication: may not result in better monitoring would waste resources.
![Page 15: The many roles of financial markets Fatih Ayık](https://reader033.fdocuments.us/reader033/viewer/2022060200/559973701a28abe47e8b46e1/html5/thumbnails/15.jpg)
Financial Markets and Financial Markets and InformationInformation
Stockholders cannot profitably combine to hire a monitor because of bearing the costs of monitoring to the others.