© K. Cuthbertson and D. Nitzsche Figures for Chapter 1 MARKETS, FIRMS AND INVESTORS (Investments : Spot and Derivatives Markets)

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© K. Cuthbertson and D. Nitzsche Figures for Chapter 1 MARKETS, FIRMS AND INVESTORS (Investments : Spot and Derivatives Markets)

© K. Cuthbertson and D. Nitzsche Figure 1.1 : Brokers and dealers Market Maker A Market Maker B Individual Investor Broker Institutional Investor

© K. Cuthbertson and D. Nitzsche Figure 1.2 : Yields on corporate bonds 6% 6.07%6.23%6.25% 7.2% 12% + Increasing risk

© K. Cuthbertson and D. Nitzsche Figure 1.4 : Simplified balance sheet (1) Current Assets (e.g. inventories, receivables) (2) Fixed Assets (2a) Tangibles (e.g. plant and machinery) (2b) Intangibles (e.g. goodwill) (1) Liabilities (e.g. accounts payable) (2) Long-Term debt (e.g. bank loans, bonds outstanding) (3) Shareholder equity (e.g. ordinary and preference shares) Total Liabilities = Total Assets = 1 + 2a + 2b Note that net working capital = current assets - current liabilities

© K. Cuthbertson and D. Nitzsche Figure 1.5 : US industrial sectors Entertainment Industry Oil Industry Financial Industry Chemical Industry Automobile Industry

© K. Cuthbertson and D. Nitzsche Summary Statistics : (Jan. 95 to Sept. 00) S&P500 Nasdaq Mean 1.76% 3.41% Std. dev. 3.94% 7.56% Correlation : (monthly data) Figure 1.6 : US stock market (S&P500 and NASDAQ) Nasdaq S&P500

© K. Cuthbertson and D. Nitzsche Hang Seng Nikkei S&P Dax FTSE Figure 1.7 : ‘Local currency’ stock indices

© K. Cuthbertson and D. Nitzsche $ per Malaysian Ringgit $ per Indonesian Ruphia $ per Thai Baht Figure 1.8 : Asian crises : spot FX rates

© K. Cuthbertson and D. Nitzsche Figure 1.9 : Types of traders Arbitrageurs : Keep price = ‘fundamental value’ Hedgers : Offset risk that they currently face Speculators : Take ‘open’ positions to make a profit