LECTURE 2.docx

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Department
Accounting & Financial Management
Course
AFM 371
Professor
Neil Brisley
Semester
Winter

Description
Anum Hussain AFM 371 Thursday, January 05, 2012 LECTURE 2  More demand pushes up the price, the higher the price you pay for something, the less it’s  going to yield.   Interest rates are low right now to encourage spending, to avoid the recession   Hutchison’s bond yields consider the risk, customer demand  ▯at the end it’s supply and  demand that sets the coupon rate.   Price goes down if there is good news that makes the bond less risky.  Barrack had bought insurance against dropping gold price, but now gold price is going up  so they wanted to get out of the contract, because it’s too expensive and they’re not even  using it.   When a firm issues shares, they should sell for less than the stock exchanges do or else no  one will buy it.   Market cap = number of shares in the market x their stock prices. So basically the price of  the entire market.  Nasdaq isn’t really a stock exchange, it’s more of a message board.  Stock market is the market for second hand shares  ▯shares are already out there.  Examples of financial markets  ▯TSX, NYSE.  Financial markets set prices through supply and demand.  Market efficiency is all about information; analysis, opinions, expectations.  If someone is buying a stock, they think it’s worth more (thinks there’s a positive NPV)  Same with selling, peo
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