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Lecture 8

BUSI 3410U Lecture Notes - Lecture 8: Dow Jones Industrial Average, Wilshire 5000, Tmx Group

Course Code
BUSI 3410U
Bin Chang

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Lecture 8: Mutual Funds
Financial Institutions
“tok Ide → T“X
- Equities in Canada primary traded on TSX 3840 senior companies (2006)
o Vetue Ehage → juio issues / of total ue of opaies listed i Caada
- Shareholders of TSX group own the TSX
- TSX is the 7th largest exchange in market capitalized order flow
- Market makers enter both bid and ask prices to remain an orderly market
- Idiiduals ete id o asks as liit odes→ liit ode ook
- Auction market → akets i hih peailig pie is deteied though the fee iteatio of
prospective buyers and sellers, as on the floor of the stock exchange
- TSX and TSX venture were first in the world among global exchanges by number of new listing for the fourth
consecutive year, according to data from the World Federation of Exchanges (WFE) as of Dec 31, 2012
TSX Composite
- TSC index is a float, value weighted index
o Float is the publicly available shares
o Market values as weights
- In 2002 S&P took over the TSX indexes to harmonise with world indexes
- Industries reshaped according to Global Industry classification standards (GICS)
Key Global Indices
- U“ stok→ Do Joes Idustial Aeage  “toks
o “tadad & poos 5 Coposite
o NASDAQ Composite
o NYSE Composite
o Wilshire 5000: all US company
o Russell 2000: small cap US equity
- Global
o M“CI Gloal & EAFE→ Euope, Austalasia Austalia & Ne )ealad ad the Fa East
Index measures the performance of more than 1000 stocks in 21 countries
o FTSE Global Equity Index Service (GEIS)
o Nikkei 225 & Nikkei 300 (Japan)
o DAX (Germany)
o CAC (France)
o Hang Send (HK)
- Bonds
o Global Citigroup World Gov`t Bond Index
o Leha U“ → still updated as of Ma , 
“ & P 5 Ide → Cotais aout 5% of the aket value of the US equity market
Mutual Fuds → Iestet Fuds: fo of Idiet iestig
- Alternative to direct investment in or ownership of individual securities
- Refers to buying and selling the shares or ``units`` of intermediaries that hold a portfolio of securities
o Ownership interest in the underlying portfolio
o Pass through of portfolio income and capital gains
o Shareholders pay fund expenses
Investment Funds closed end
- Fixed number of nonredeemable shares are sold at an initial offering and are traded in over- the counter
market like common stocks
- Market price fluctuates with the value of assets held by the funds; it may be above or below the value of
assets held by the fund, depending on the market
- Problem: once shares have been sold, the fund cannot take in any more investment dollars
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