1. Basics of financial management Chapter 10

2. Financial markets Banks Institutional investors Private investors
Meeting place for demanders and suppliers of capital
Banks
Institutional investors
Private investors
Businesses
Suppliers of capital

3. Securities Possible return Relative risk Shares High Bonds Reasonable
Limited
Options
Very high
Futures
Savings
Low
Very low

4. Options Buyer Seller Call option
Right to purchase a fixed number of objects at the exercise price
Obligation to sell a fixed number of objects at the exercise price
Put option
Right to sell a fixed number of objects at the exercise price
Obligation to buy a fixed number of objects at the exercise price

5. Share option value Intrinsic value Time value Market value
n x (MPS – EP) call option
n x (EP – MPS) put option
Intrinsic value
MPO - IVO
Time value
Market value on the basis of supply and demand
Market value

6. Share option value Put option Market value option
Intrinsic value option
Time value option EP
 MPS
Market value option
Put option
Intrinsic value option
Time value option EP
 MPS

7. Futures Price share Interest Dividend Share future price
Obligation to buy or sell a specified quantity of an underlying value at an agreed price at a future date
Price share
Interest
Dividend
Share future price

8. Investment ratios Dividend yield Pay-out ratio Price/earnings ratio
Dividend ratios
Dividend yield
Pay-out ratio
Dividend per share
Market price share
Dividend per share
Earnings per share
Price ratios
Price/earnings ratio
Price/cash flow ratio
Price/book ratio
Market price per share
Earning per share
Market price per share
Cash flow per share
Market price per share
Book value per share