Chapter Twenty One

Copyright © 2000 Addison Wesley Longman Slide #21-1

Chapter Twenty One

SECURITIES MARKETS AND FIRMS


Underwriting Stocks and BondsGiving Advice

When to offer?At what price?

Filing DocumentsSECRegistration statementProspectus

UnderwritingSyndicate

Marketing OutcomesFully subscribed UndersubscribedOversubscribed

Best Efforts



Ten Largest Underwriters in the U.S.


Securities Brokers and DealersBrokerage Service

Securities Orders Market Order

Limit Order

Other ServicesMargin Credit

Full-Service Brokers

Discount Brokers

Securities DealersMarket Makers


Types of Investment Funds

Balanced Funds

Bond Funds

Value Funds

Growth Funds

Growth and Income Funds

Index Funds

Money Market Mutual Funds


Mutual Funds on the Rise


Distribution of Mutual Fund Net Assets by Type of Fund


Household Ownership of Mutual Funds


Fee Structure of Investment Funds

Open-End Fund

Closed-End FundLoad Funds

No-Load Funds


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 $35,000,000Bonds $15,000,000Cash $3,000,000

Total value of assets $53,000,000Liabilities -$800,000

Net worth $52,200,000Outstanding shares 15 millionNAV = $52,200,000/15,000,000 = $3.48


Hedge Funds1. Take advantage of unusual spreads between security prices

2. Often highly leveraged 3. Relatively unregulated