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    Securities and Investment

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    Syed Ali Shakeel
    The document discusses various topics related to securities and investments including: 1) It describes securities markets, stocks, bonds, and other investments like commodities futures. 2) It discusses buying and selling securities through primary and secondary markets and the role of regulatory bodies like the SECP in Pakistan. 3) Key terms are defined including investment banks, common stock, preferred stock, bonds, stock exchanges, and bull and bear markets.

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    Securities and Investment

    Uploaded by

    Syed Ali Shakeel
    73 views24 pages
    The document discusses various topics related to securities and investments including: 1) It describes securities markets, stocks, bonds, and other investments like commodities futures. 2) It discusses buying and selling securities through primary and secondary markets and the role of regulatory bodies like the SECP in Pakistan. 3) Key terms are defined including investment banks, common stock, preferred stock, bonds, stock exchanges, and bull and bear markets.

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    3. Securities and Investment

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    The document discusses various topics related to securities and investments including: 1) It describes securities markets, stocks, bonds, and other investments like commodities futures. 2) It discusses buying and selling securities through primary and secondary markets and the role of regulatory bodies like the SECP in Pakistan. 3) Key terms are defined including investment banks, common stock, preferred stock, bonds, stock exchanges, and bull and bear markets.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    73 views24 pages

    Securities and Investment

    Uploaded by

    Syed Ali Shakeel
    The document discusses various topics related to securities and investments including: 1) It describes securities markets, stocks, bonds, and other investments like commodities futures. 2) It discusses buying and selling securities through primary and secondary markets and the role of regulatory bodies like the SECP in Pakistan. 3) Key terms are defined including investment banks, common stock, preferred stock, bonds, stock exchanges, and bull and bear markets.

    Copyright:

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    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 24

    CHAPTER 19

    Understanding Securities and Investments

    Chapter Outline
    Securities Markets Stocks Bonds Other Investments Buying and Selling Securities Securities Market Regulation

    What Are Securities?


    Stocks and bonds representing secured, or asset-based, claims by investors against issuers

    What is the Primary Securities Market?

    Market in which new stocks and bonds are bought and sold

    What is the Security and Exchange Commission (SEC)?

    Federal agency that administers Pakistans securities laws to protect the investing public and maintain smoothly functioning markets

    SECP
    It Succeeded the Corporate law Authority and came into existence on Jan 01, 1999. The SECP board is directly answerable to the parliament. Consist of 06 division
    Security market Non-banking financial sector Company law administration Enforcement Insurance Support services

    What is an Investment Bank?

    Financial institution engaged in issuing and reselling new securities

    Investment Banking
    Provides three important services: They advise companies on the timing and financial terms of new issues. By underwriting (buying) new securities, they bear some of the risks of issuing them. They create the distribution networks for moving new securities through groups of other banks and brokers into the hands of individual investors.

    What is the Secondary Securities Market?

    Market in which stocks and bonds are traded

    Common Stock
    Stock values are expressed in three different ways:
    Par value is the face value of a share of stock at the time it is originally issued Market value is the current price of a share in the stock market Book value is the value of a common stock expressed as total shareholders equity divided by the number of shares of stock

    Investment Traits/qualities of Common Stock


    Common stocks are among the riskiest of all securities.
    Common stocks offer high growth potential. Blue-chip stock is issued by a well-established company with a sound financial history and a stable pattern of dividend payouts The Old Economy versus the New: Whats a Blue Chip Now?

    Preferred Stock
    Preferred stock is usually issued with a stated par value.
    Dividends are typically expressed as a percentage of par value.

    Some preferred stock is callable.


    Call price is the amount of payment specified in the purchase agreement between the firm and its preferred stockholders

    Investment Traits of Preferred Stock


    Preferred stock has first rights to dividends.
    Preferred stock is less risky than income from the same firms common stock.
    Cumulative preferred stock is preferred stock on which any missed dividend payments must be paid as soon as the firm is able to do so

    What is a Stock Exchange?

    Organization of individuals formed to provide an institutional setting in which stock can be traded

    Stock Exchanges
    The Trading Floor
    Trading is allowed only at an actual physical location called the trading floor.

    Brokers are individuals or organizations who receive and execute buy-and-sell orders on behalf of other people in return for commissions. Types include:
    Discount Brokers Online Trading Full-Service Brokers

    The Karachi Stock Exchange


    Established on 18 Sept, 1947. At the beginning 90 members were registered Listed Companies 690 Total 34 sectors

    Market Indices
    KSE began with a 50 shares index. On Nov 01, 1991 the KSE-100 was introduced. KSE-100 is a capital weighted index Consists of 100 companies Represents 83% market capitalization. All share index was introduced on Sept 18, 1995.

    What is a Bond?
    Security through which an issuer promises to pay the buyer a certain amount of money by a specified future date

    Types of Bonds
    Government bond is issued by the federal government Municipal bond is issued by a state or local government

    Corporate bond is issued by a company as a source of long-term funding.


    Registered and Bearer (or Coupon) Bonds Secured Bonds Debentures

    The Retirement of Bonds


    Callable bonds may be called in and paid for by the issuer before its maturity data
    Sinking Fund provisions

    Serial bonds are retired when the issuer redeems portions of the issue at different preset dates Convertible bonds can be retired by converting it to common stock Secondary Markets for Bonds
    Nearly all secondary trading in bonds occurs in the OTC market rather than on organized exchanges.

    Government bonds in Pakistan


    Issued By Government
    Pakistan Investment Bonds Euro Bond Prize Bonds

    Corporate bonds in Pakistan


    Issued By Corporations
    Term Finance Certificates
    29 TFCs are registered and traded on Karachi Stock Exchange

    Other Investments
    Commodities market is a market in which futures contracts are traded Futures Contracts

    Bull and Bear Markets

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