1 Financial Management Didi Sundiman didi.unda.ac.id Hp

2 Chapter 2: Financial Markets and Institutions

3 OBJECTIVES Identify types of financial markets & institutions and Different types of stock markets. Explain how the stock market has performed in recent years. why some markets are more efficient than others.

4 THE CAPITAL ALLOCATION PROCESS

5 CLASSIFY MARKETS Physical asset markets versus financial asset markets Spot markets versus futures markets. Money markets versus capital markets. Primary markets versus secondary markets. Private markets versus public markets.

6 FINANCIAL INSTITUTIONS Investment banks Commercial banks Others …p.59

7 THE STOCK MARKET the most active secondary market—and the most important Physical location exchanges, NYSE, the American Stock Exchange (AMEX) electronic dealer-based markets, which include the Nasdaq

8 THE MARKET FOR COMMON STOCK Outstanding shares of established : the secondary market. Additional shares sold Initial public offerings

9 STOCK MARKETS AND RETURNS expected and realized Stock Market Reporting: The Wall Street Journal Stock Market Returns, next

10 STOCK MARKET EFFICIENCY Market price Intrinsic value Equilibrium price Efficient market

11 STOCK MARKET EFFICIENCY

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