1. Copyright © 2000 Addison Wesley Longman Slide #21-1 Chapter Twenty One SECURITIES MARKETS AND FIRMS

2. Copyright © 2000 Addison Wesley Longman Slide #21-2 Underwriting Stocks and Bonds Giving Advice When to offer? At what price? Filing Documents SEC Registration statement Prospectus Underwriting Syndicate Marketing Outcomes Fully subscribed Undersubscribed Oversubscribed Best Efforts

3. Copyright © 2000 Addison Wesley Longman Slide #21-3

4. Copyright © 2000 Addison Wesley Longman Slide #21-4 Ten Largest Underwriters in the U.S.

5. Copyright © 2000 Addison Wesley Longman Slide #21-5 Securities Brokers and Dealers Brokerage Service Securities Orders Market Order Limit Order Other Services Margin Credit Full-Service Brokers Discount Brokers Securities Dealers Market Makers

6. Copyright © 2000 Addison Wesley Longman Slide #21-6 Types of Investment Funds Balanced Funds Bond Funds Value Funds Growth Funds Growth and Income Funds Index Funds Money Market Mutual Funds

7. Copyright © 2000 Addison Wesley Longman Slide #21-7 Mutual Funds on the Rise

8. Copyright © 2000 Addison Wesley Longman Slide #21-8 Distribution of Mutual Fund Net Assets by Type of Fund

9. Copyright © 2000 Addison Wesley Longman Slide #21-9 Household Ownership of Mutual Funds

10. Copyright © 2000 Addison Wesley Longman Slide #21-10 Fee Structure of Investment Funds Open-End Fund Closed-End Fund Load Funds No-Load Funds

11. Copyright © 2000 Addison Wesley Longman Slide #21-11 Calculating a Mutual Fund’s Net Asset Value Net Asset Value (NAV) Definition: Total value of the mutual fund’s stocks, bonds, cash, and other assets minus any liabilities such as accrued fees, divided by the number of shares outstanding. Stocks$35,000,000 Bonds$15,000,000 Cash $3,000,000 Total value of assets$53,000,000 Liabilities -$800,000 Net worth $52,200,000 Outstanding shares 15 million NAV = $52,200,000/15,000,000 = $3.48

12. Copyright © 2000 Addison Wesley Longman Slide #21-12 Hedge Funds 1. Take advantage of unusual spreads between security prices 2. Often highly leveraged 3. Relatively unregulated