investment review (Laica, aurea&jumwan, Sierra )

MARKET

A system or place where buyers and sellers interact to exchange goods, services, or financial assets.

Purpose and function

• Facilitates Trade

• Price Determination

• Efficient Resource

• Encourages Competition and Innovation

• Liquidity

Characteristics of a Good Market

• Transparency

• Liquidity

• Low Transaction Costs

• Competitive

• Regulation and Trust

Primary Market

This is where new securities (stocks, bonds) are issued for the first time.

Primary Market

Buyers purchase directly from the issuer.

Secondary Market

This is where existing securities (stocks, bonds) are bought and sold among investors

Secondary Market

The issuing company does not receive money from these trades; instead, investors trade among themselves.

Third Market

This refers to over-the-counter (OTC) trading of exchange-listed securities

Third Market

Large institutional investors (such as pension funds and mutual funds) trade directly with each other, often bypassing stock exchanges to get better prices.

Primary markets

The ________ is focused on the issuance of new securities and the initial raise of capital

Primary markets

minimize risk but offer lower returns.

Tertiary markets

The _____ emphasizes the trading of existing securities outside of traditional exchanges.

Tertiary markets

Carry the highest risk but offer the potential for significant returns.

Government Bond Issues

 the procedure by which the government borrows money from investors by issuing bonds. These bonds are debt instruments that reflect investors' loans to the government.

Government Bond

a debt security issued by a government to support spending and obligations.

coupon payments

Government bonds pay bondholders periodic interest payments called______?

sovereign debt

Government bonds issued by a federal government are also known as_____?

Treasury Bills

popularly known as T-Bills

Treasury Bills

are peso-denominated short- term fixed income securities issued by the Republic of the Philippines through its Bureau of Treasury.

Treasury notes

Throughout its term, owners receive an interest payment every six months.

Treasury notes

These are short-term to long-term investments with relatively low default risk.

Treasury bond (or T-Bond)

is a long- term government debt security issued by the U.S. Treasury Department with a fixed rate of return. Maturity periods range from 20 to 30 years.

Municipal Bonds Issues

are debt obligations that states, cities, counties and other public entities issue to finance infrastructure projects such as building schools, highways and sewer systems, as well as to fund the issuer’s day-to-day obligations

Competitive bidding

is a formal process to identify and request equipment and services the applicants need, so that potential service providers can review those requests and submit bids for them.

Negotiation

the process of discussing the terms of a business deal. This type can involve two or more parties, depending on the subject and the organizations involved.

Private placement

is a sale of stock shares or bonds to pre-selected investors and institutions rather than on a public exchange.

Private placement

It is an alternative to an initial public offering (IPO) for a young company seeking to raise money to expand.

Corporate Bond

debt securities issued by a corporation in order to raise money to grow the business, pay bills, make capital improvements, make acquisitions, and for other business needs.

Corporate Bond

This refers to the process by which a corporation raises capital by issuing bonds to investors. These bonds are essentially debt instruments through which the issuing company borrows money from investors, promising to pay back the principal amount on a specified maturity date, along with periodic interest payments (coupons) throughout the bond’s life.

initial public offering (IPO)

a company offers shares of stock or debt securities to the public for the first time in an attempt to raise capital. On the other hand, if a company is already listed on stock exchanges and simply decides to release additional stock or debt instruments, it is considered a seasoned issue.

publicly traded

When a privately-owned company decides to raise capital by offering shares of stock or debt securities to the public for the first time, it conducts an initial public offering, at which point it becomes a ________ company.

underwriting process

If and when a company decides to sell shares of its stock to the public to raise money for operations or other uses, it engages the services of one or more investment banks to act as the underwriters responsible for managing the _______ of the IPO.

seasoned issue

When an existing publicly traded company decides to raise additional capital by selling additional shares of its stock or debt instruments to the public, the share offering is considered a ________?

secondary offerings or subsequent

Seasoned issues, also known as_____________ , involve the issuance of additional shares of a publicly traded company to the public.

SECONDARY MARKET

The ______ is where investors buy and sell securities from other investors (stock exchanges).

SECOND BOND MARKET

The ______ is where previously issued bonds are traded among investors after their initial issuance.

Auction Markets

In an ____ market, trading occurs through centralized exchanges where buyers and sellers submit their orders to a central location.

Dealer Markets

This is also known as an over-the-counter (OTC) market, trading is conducted through intermediaries known as dealers or market makers.

Auction Markets

Orders are matched based on predetermined rules, and trades are executed when the best bid (buy order) matches the best ask (sell order) at a given price.

Call Market

A matches and executes the grouped trade orders at specified times during an entire trading day

Call Market

A marketplace where trading occurs at chosen times.

Continuous Market

a matches and completes the grouped trade order throughout a trading day.

Continuous Market

A marketplace where trading occurs continuously