Textbook Notes (363,507)
Canada (158,391)
MGTA02H3 (361)
Chapter 9

Chapter 9 Textbook Notes

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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

MGTA04 01 Chapter 9: Understanding Securities and Investments Securities Markets (pg. 199) - Securities are stocks and bonds which represent a secured-asset-based claim on the part of investors that can be bought or sold o Stocks: holders of stocks have claims 43842041,.47547,9L438,88098,3K,;0, say in how the company is run. o Bonds: strictly represents financial claims for money owed to holders by a company - Markets in which stocks and bonds are sold are called securities markets Primary and Secondary Markets for Securities - Primary securities markets handle the buying and selling of new stocks and bonds by firms or governments. New securities are sold to one buyer or a small group of buyers called private placements to allow the business to keep their plans confidential Investment Banking - To bring a new security to market, the issuing corporation must obtain approval from a provincial securities commission and the services of an investment banker - Investment banker serve as any financial institution engaged in purchasing and reselling new stocks and bonds - Firms such as RBC Dominion Securities provide 3 types of investment banking services: 1. Advise company on the timing and financial terms for the new issue 2. By underwriting (buying) the new securities, investment bankers bear some of the risk of issuing the new security 3. Create distribution network that moves the new securities through groups of other banks and brokers into the hands of individual investors - Secondary securities market sells and purchase previously issued stocks and bonds Stocks (pg. 199 207) - The availability of different types of stocks and markets have been established for conveniently buying and selling stocks Common Shares - Individuals and other companies buy a firms common shares in hope that the shares will increase in value, affording them a capital gain, andor will provide dividend income - The value of a common share is expressed in 2 different ways: market value & book value Market Value - The market value is the current price of one share of a stock in the secondary securities market; the real value of a share - ,7N09;,O:0701O0.98-:078ZLOOL3J308894L3;089L3,.425,3 - Market value can be influenced by both objective factors and subjective factors o -M0.9L;01,.94780[,25O0.425,385741L98 o Subjective factors: - rumours (e.g. unverified information of a company strike) - investor relations (e.g. playing the positive aspects of a www.notesolution.com
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