Securities: essence, role in the economy, types. Why do we need a securities market? What are company shares?
IN this section you will find basic, reference articles. They serve as the basis for understanding all other parts of the site. The concepts discussed here are relevant not only to stock exchanges.
Most topics will be of interest to novice investors, even if they focus on other financial instruments (from the simplest - index funds to options contracts.
This will not make you a capitalist, but it will help you quickly get up to speed and easily master other, more complex and practical concepts.
However, you can do the opposite (especially if you already have some experience and knowledge). Refer to this guide whenever problems or difficulties arise. It is convenient to search for various terms using the site search form.
When studying texts and diagrams, you should remember the basic principle: “knowledge not for the sake of knowledge, but for the sake of money.” As you read, try to understand where the information offered may be useful to you personally. It will be especially useful if the answer is not obvious. If you feel there is something you shouldn't know, there is a gap in your knowledge or understanding of how financial markets work. Of course, this gap needs to be corrected.
The stock market occupies a special place in the overall structure market economy due to the fact that the object of purchase and sale on it is a specific product - securities.
Release valuable papers carried out, first of all, to mobilize and more rationally use temporarily free financial reserves of firms and banks.
Securities serve as an integral attribute of a modern market economy. They are understood as documents drawn up in a special way that express the relationship between the parties and confirm the right to one or another type of property or cash in a specified amount.
From an economic point of view, security acts as a form of existence of capital. At the same time, the owner of capital does not have capital itself, having only rights to it, which are certified in the form of a security.
- A security is similar in properties to money. This should include, first of all, the possibility of exchanging for money, as well as the possibility of using it in calculations, using it as collateral, long-term storage, inheritance, etc.
- Price paper can be divided into order, registered and bearer.
- Under bearer security is understood as a document on which the name of the owner is not recorded, while her appeal does not require any registration.
- A security with the name of its owner recorded on the form and entered in the register of owners is called registered.
- Order security has the features of both bearer and registered securities.
- In modern world practice, two classes of prices have become widespread. securities: basic and derivatives.
- The main ones are those that are based on property rights to a certain type of asset. At the same time, basic prices. papers can be divided into primary and secondary.
- Derivatives refer to prices. securities for a certain price asset.
Securities are also classified according to the degree of risk.
To the main prices. securities can include shares, bonds, bills, etc.
Shares certify the right of their owner to a share of ownership of any joint stock company. Such a security gives its owner the right to receive a certain part of the profit of a given joint-stock company in the form of dividends, and also provides the opportunity to participate in the management of this joint-stock company. In turn, all shares can be divided into ordinary and preferred.
The owner of ordinary shares acts as the owner of the joint stock company. Such a share provides equal rights to all shareholders. The size of dividends is affected by the profit received by the joint-stock company.
Preferred shares provide a set amount of dividends, but at the same time, they do not provide their owner with voting rights.
First of all, predetermined dividends are paid preferred shares. Then, from the remainder of the profit, dividends are paid to the owners of ordinary shares. In a similar way - residual - the return of deposits is determined by ordinary shares subject to the liquidation of the enterprise with property losses or its ruin.
Each share must have a number of details, for example, a number, specified par value, category, etc. Shareholders can receive a share certificate, which serves as evidence of their ownership of a certain amount of securities data.
Bonds act as a document that certifies the right of its owner to receive from the person
who issued the security, within the established period nominal value or other property equivalent. Bond owners have the right to receive interest on them, the amount of which is influenced by many factors, ranging from the circulation period to the level of inflation in the country.
Among the main factors influencing the level of profitability of this type of price. securities, one can relate to the duration of their circulation period. Depending on the circulation time, issued bonds are divided into 4 groups: short-term, medium-term and long-term, as well as perpetual.
Bondholders are not granted the rights of owners of a joint stock company, as is the case with stockholders. At the same time, such prices. papers provide some advantages. For example, if Joint-Stock Company becomes bankrupt, first of all his obligations to bondholders and other creditors are repaid. Only then are the remaining assets subject to distribution among shareholders.
Government securities.
Under government prices. papers understand the form of existence of internal public debt. The issuer of this type of debt prices. papers are directly acted by the state. The need to issue such securities into circulation is due to the need to solve a number of problems.
With their help, financing is carried out on a non-inflationary basis, as well as targeted government programs in the sphere housing construction, social security. State prices. papers provide the opportunity to regulate economic activity. They are placed through the central bank or the Ministry of Finance in paper or paperless forms. Methods for placing this type of securities can be auctions, closed distribution among an established circle of investors, etc.
Bill of exchange It has been used as a calculation tool since ancient times. His distinctive feature The actual definition of a security is: a bill of exchange is an unconditional obligation to pay a fixed amount of money on time at a specified place. A promissory note serves as an abstract promissory note that is not subject to any conditions. Its subject can only be monetary funds.
Bills of exchange are also classified according to a number of criteria.
For example, a promissory note is issued and signed directly by the debtor, while a bill of exchange is issued and signed by the creditor. Promissory notes and bills of exchange are divided into 2 groups: interest and discount. IN modern economy the most common are promissory notes, which is due to the relatively low tax rate of these securities and
Certificates of deposit and savings certificates are understood as securities, the right to issue which is granted exclusively to commercial banks.
A certificate of deposit is a type of security
which certifies the amount of a cash deposit made to a banking institution, as well as the rights of the depositor, acting as the holder of this certificate, to receive the deposit amount at the end of a certain period, and the interest specified in the certificate. The issuance of the deposit and interest must be carried out by the bank that issued this certificate, or by a branch of such a banking institution. A certificate of deposit is issued to a depositor who is a legal entity, and an individual receives a savings certificate.
The check and bill of lading can be classified as primary prices. papers
Their purpose is to service payments for goods and services or their circulation. A check is a written order from the drawer banking institution about payment to the recipient of the check set amount money. A bill of lading is a document of a standard form, which is established in international practice for the transportation of goods, certifying its loading, the transportation process and the right to receive.
Derivative price category. securities includes options, futures contracts, warrants, etc.
An option provides the right to purchase or sell
within a specified period at a fixed price of a specified volume of goods, currency, prices. securities or receiving a fixed income from a financial investment. This right drawn up in the form of an agreement.
In modern exchange practice, two types of options have become widespread:
- put option
- option to buy.
A put option allows its owner to receive a specified property value from the seller of a security at a certain future point in time at a fixed price. A put option gives its buyer the right to sell property at a specified point in time at a certain price. The exercise price of the option does not change throughout the entire option period. At the same time, the premium in exchange trading for the same option may vary.
Futures contract acts as a standard form of an exchange agreement for the purchase and sale of an established exchange asset at a fixed point in time in the future at a negotiated price, which is established by the parties to the transaction immediately at the time of its conclusion. The basis of this type of security can be any abstract asset, be it price, exchange rate, etc. A futures contract today serves as a modern tool for quickly leveling prices, as well as eliminating their fluctuations on various markets.
Warrant acts as a form of option that provides the right to purchase a specified number of shares or bonds at the exercise price at any time, limited by the expiration date of the warrant. As a rule, this type of securities is issued as an addition to any agreement to make it more attractive to the investor.
Instructions
The stock market began its history back in the 17th-18th centuries. Its formation was due to growing government spending for military purposes and the urgent need to attract borrowed money to replenish the budget. That is why bonds became the first securities. The first stock exchanges appeared in countries Western Europe.
Today, the volume of the global stock market exceeds $50 trillion. The list of the most developed countries in terms of securities trading volume - the USA, Asia-Pacific countries and Europe.
The key purpose of the stock market is the redistribution of available funds in favor of the most promising sectors of the economy. Companies and governments use stock market as a way to raise funds for the development of the company.
Some investors have managed to make huge fortunes in the stock market. The most striking example is W. Buffett. How do you make money in the stock market? It all depends on what securities the investor has in his hands. If we are talking about shares, then they provide the opportunity to make a profit in the form of dividends, or from the difference between the purchase/sale price. The value of shares may rise under the influence of favorable market conditions and successful development of the company. Bonds provide a fixed return. The advantage of investing in securities over other types of investment is the opportunity to receive unlimited profitability, which can be many times greater than the profit from deposits. Moreover, this method of investment refers to.
The stock market has its own structure. It includes investors, brokers and supervisory authorities. The purchase of shares is carried out through special intermediaries - brokers. Three models of stock market operation have emerged in the world. This is the Anglo-American model, where non-banking institutions act as brokers; German - here the brokers are banks and mixed model, where brokers can be banks and non-banking organizations.
Trading in the stock market is carried out on stock exchanges. The largest exchanges are the New York, London, and Tokyo exchanges. Leading in Russia MICEX-RTS exchange.
The stock market can be classified on various grounds. In terms of securities, there are markets for stocks, bonds and derivatives (e.g. futures contracts). By issuer, a distinction is made between the market for company securities or government securities. Based on the types of transactions, there are cash (or spot), forward market, etc. The stock market can also be divided according to industry and territorial characteristics. Such diversity investment instruments allows the use of a variety of trading strategies and diversify your investment portfolio.
The stock market today is a significant part of the financial industry, where trillions of dollars of assets are traded. The capitalization of all stock markets in the world today is comparable to the GDP of the entire world, and even exceeds it. This industry employs millions of people.
But what is the stock market like from the inside? What institutions and mechanisms are there that are responsible for the security and smooth operation of this huge monetary mechanism?
In this article we will analyze the structure of the Russian stock market, its main players, their functions and what they give primarily to the private investor.
First of all, it must be said that the stock market and the securities market are not exactly the same thing. Classically under securities market understand any relationship between various market participants related to the circulation, issue, and withdrawal of various securities from circulation. The securities market thus covers all types of transactions in both the exchange and over-the-counter sectors. In turn, the stock market is part of the national securities market, operating in a structured and organized form in the form of a stock exchange.
Strictly speaking, stock market is an organized securities market, all participants of which work according to established rules.
Scheme of the stock market:
There are 5 types of participants in the stock market:
Market participants issuing securities. They are also called issuers. These are, for example, enterprises that issue shares and bonds, as well as the state and federal subjects that issue bonds.
Market participants organizing the circulation of securities. This stock exchange, on which securities are bought and sold by individual and institutional investors and traders, as well as depositories And clearing companies responsible for control of settlements and accounting of purchase and sale transactions.
The next group consists of participants who organize access to the financial assets of the exchange for a wide range of traders and investors. This brokers, management companies, as well as dealers. These companies have the right to carry out transactions on the exchange both on their own behalf and on behalf of their clients, thus providing access to stock market to everyone who wants it.
Perhaps the most important group, for the sake of which the entire infrastructure was created, is the private and institutional investors And traders. Those who purchase securities for both the purpose of ownership and resale.
The main regulator deserves a separate group, establishing rules for all participants, constantly monitoring the activities of participants and strictly punishing for violation of the rules - this is Central Bank Russian Federation(TSB RF).
How the exchange works
So, the basis of the stock market is precisely the exchange on which transactions are carried out only with stock assets and instruments registered (quoted) on it. The range of such financial values is currently expanding significantly. These already include not only the securities themselves, but also currencies and precious metals, contracts, credit agreements, as well as various hybrid instruments created on the basis of other securities, currencies and contracts (for example, futures and options).
First in modern Russia in May 1990, the Moscow Commodity exchange. In 1991, more than a hundred exchanges were already operating in Russia, this is about half of the exchanges existing at that time throughout the world. In 1992, the main exchange was created stock market MICEX, and in July 1995 it appeared modern market RTS. In 2010, these exchanges announced a merger and already in December 2011, on their basis, the largest integrated exchange structure in Russia was created, renamed the Moscow Exchange.
Today, the exchange and other institutional participants in the organized securities market in Russia form a system with very high degree regulation, transparency and orderliness of operations. Which, first of all, is aimed at protecting the interests of investors.
Stock Exchange is an organization that provides a platform and infrastructure for organized trading of securities and other financial assets. In the 21st century, an exchange is, first of all, a high-tech company, the basis of which is servers, high-speed and secure equipment, the latest software. Since the main task of the exchange is to connect hundreds of thousands and millions of buyers and sellers of financial assets via the Internet and provide them with the opportunity to conclude transactions with each other. Millions of transactions are made on the Moscow Exchange every day. The strategic goal of the exchange is to maintain market liquidity. A liquid market implies a high frequency of transactions, significant trading volumes, which leads to smooth price movements and low spreads (the difference between the purchase and sale prices at the same point in time). Low market liquidity, on the contrary, leads to tension among exchange participants, fear that there will be no one to sell the asset and the emergence of negative expectations and panic among exchange trading participants.
That is why the activities of the exchange are strictly regulated. At the same time, the owners of the exchange do not have the right to extract and receive any income from the purchase and sale of financial assets on the exchange. This ensures the impartiality of the exchange regarding the prices of the assets themselves. At the same time, the exchange earns on commissions and if the exchange has high liquidity and many trading participants, the exchange will be a fairly profitable organization (for example, the New York Stock Exchange, Moscow Exchange, etc.).
Only special, accredited participants - brokers, dealers, management companies with appropriate licenses - have the right to trade on the stock exchange. In turn, private and institutional investors and traders who wish to trade on the stock exchange participate in stock trading indirectly through these accredited organizations acting as intermediaries. To do this, it is enough to open an account with this organization.
Currently, there are several stock exchanges operating in Russia. However, the real bulk of trading in stock values is actually concentrated on two exchanges:
OJSC Moscow Exchange.
This exchange was formed in 2012 through the merger of the MICEX and RTS exchanges. Currently it is the largest stock exchange in Russia and the CIS. Quotations from this exchange are systemically important and are used, for example, to establish official exchange rate Central Bank. The Moscow Exchange has several trading sections within which traditional securities such as stocks and bonds, as well as derivatives, are traded. financial instruments, such as futures, options, there is a currency section and even drag. metals. Part financial group The exchange also includes a central depository (NPO JSC National Settlement Depository) and a clearing center (Bank National Clearing Center).
OJSC "St. Petersburg Exchange".
In November 2014, trading in foreign securities began on the St. Petersburg Exchange. Currently, more than 180 shares of the world's leading companies, such as Apple, Facebook, Visa, and others, are admitted to trading. The plan is to make all American stocks from the S&P-500 index available to Russian investors. These are the 500 most liquid and interesting stocks on the American market. Essentially this great way diversification of its investment portfolio by country and currency without actually opening a foreign brokerage account. We wrote in more detail about the St. Petersburg Exchange in the article “”.
How to get on the stock exchange
Also, accredited participants in the stock market can be management companies that manage clients’ capital at their own discretion and, if they make a profit, share it with clients.
For the ordinary investor or trader, both physical and legal entity The services of a broker or management company will be much more accessible. By concluding an agreement for brokerage service, the investor, for a commission (percentage of the transaction), gets the opportunity to carry out trading operations on the stock exchange from your brokerage account. In case of management company- the client transfers funds to the management of professional market participants, expecting income after a certain period, while he himself does not participate in the selection and evaluation of securities. In the article "" we described the advantages and disadvantages of each of these methods.
It is important: It is worth noting that the activities of brokers are organized in such a way that client accounts and brokers’ own funds are strictly separated; in fact, brokers do not have the right to access client accounts. Unlike, for example, banks, where the client simply gives the amount of funds, and the bank disposes of them at its own discretion, issues them on credit, etc. Further, when we talk about depositories, we will see another mechanism for protecting clients’ brokerage accounts.
IN modern conditions development electronic technologies stock trading is becoming more and more accessible to ordinary people, not professional participants stock market. And not only brokers appear, but also sub-intermediaries, such as Tinkoff Bank, which, on the one hand, take more high commissions for transactions, and on the other hand, they allow you to perform transactions through your phone literally in one click.
An example of a technical solution for private investors in personal account Tinkoff Bank:
We have already described the role and functions of all key participants in the stock market. Let us now consider the auxiliary participants who are involved in the control and maintenance of the stock market infrastructure. The institutional infrastructure of the stock market, which ensures its functioning but is not directly involved in exchange trading, includes depositories, clearing organizations, credit and financial organizations and the market regulator (in Russia this is Central bank, which has been a macro regulator in financial markets since 2014).
Control of exchange transactions
The main task depository activities is the accounting and registration of the transfer of rights of owners of securities, as well as the storage of information records about the owners of securities. The depository confirms and protects the rights of securities owners from misconduct issuer or broker. Depositories operate on the basis of a license and their activities are also controlled by the Central Bank of the Russian Federation. Depositories provide assistance in exercising the rights of securities owners, for example, when receiving dividends, exercising rights to manage the company through participation in general meeting shareholders, etc. For this purpose, the depositary can provide related services: maintaining client cash accounts, representing shareholder interests at the general annual meeting, monitoring the issuer’s activities, market analysis, tax and investment consulting, etc.
It is important: From an investor's point of view, depositories perform a very important protective function. Since all records of securities are stored in the depository, this makes the client independent of the broker. By closing his brokerage account with a particular company, the client continues to remain the owner of the securities. This is also a certain insurance in case the broker is closed due to various reasons. We can simply go to another broker to open an account and continue to work with our securities.
At the same time, storing information records about the owners of securities in the depository does not mean the transfer of ownership of the client’s securities to the depository.
Clearing organization deals with determining the mutual obligations of participants in exchange trading. The clearing organization also operates on the basis of a license. Essentially, the exchange clearing house monitors all transactions and records the initial and final sellers of transactions. Next, the clearing house must determine how much brokers and dealers must pay each other based on the results of the exchange session.
Today, the most important regulator in the stock market is the Central Bank. But it was not always so. The first regulator of the Russian stock market was the Federal Commission for the Securities Market, created in 1993. Further, its powers in 2004 were transferred to the Federal Service for financial markets(FSFM). And since 2014, the functions of the securities market regulator have been concentrated in Central Bank RF. Within the Central Bank of the Russian Federation, the stock market is handled by the Department of the Securities Market and Commodity Market, to which all powers are given Federal service on financial markets in the field of licensing of professional stock market participants, regulation, control and supervision of their activities.
Therefore, for private investors, the main guarantee that they are dealing with an accredited broker or management company is the presence of appropriate licenses issued by the Federal Financial Markets Service or the Central Bank of the Russian Federation. It is worth noting that most Russian brokers, for example in the Forex market, do not have any licenses for their activities. What does it say about complexity? legal status and sometimes even illegitimate activities of such companies. In turn, the activities of stock market brokers are more transparent. On the exchange website you can see lists of such licensed brokers, as well as their various ratings, and make sure of the reliability of the company you plan to work with.
Summarize
The stock market is one of the most attractive investment options for free funds. Despite the financial risks, this market provides the investor or trader with the prospect of obtaining high returns and relatively guaranteed liquidity of their investments. In Russia, the stock market is quite young and greatly undervalued. That is why it is quite dynamic and is of interest not only to domestic but also to foreign investors. In order to understand how to take your first steps in investing in the stock market, we invite you to our free master classes, where we tell you how to minimize risks, find protected investment assets and at the same time achieve stable and decent returns -.
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50. Securities market: concept, structure, types.
RCB- this is that part of the financial markets that consists of economic relations regarding the issue and circulation of the Central Bank, i.e. This is a set of economic institutions, tools and mechanisms used to attract and redistribute financial resources. resources in society.
Structure of the securities market represent three main components:
– trade item(i.e. securities and their derivatives);
– professional participants; Issuers– an organization that has issued (issued) securities for the development and financing of its activities (enterprises of various forms of ownership, industries and types of activities, authorities at various levels). Investors– persons who have temporarily free funds, seeking their profitable placement and investing them in the Central Bank (legal entity, legal entity, government authorities). Intermediaries are professional participants of the securities market, they are engaged in the placement of securities of issuers in the primary market - underwriting and transactions with securities in the secondary market.
– market regulation system; Infrastructure is a set of economic institutions, instruments and mechanisms that serve the functioning of the securities market. It includes institutions engaged in settlement and clearing activities, storage of securities certificates, maintaining a register of securities owners, etc.
Types of securities. 1.According to the time of circulation of the Central Bank: money market– Central Bank circulation with a maturity of less than 1 year (instruments: treasury bills, certificates of deposit); stock– a set of mechanisms and actions aimed at trading securities (stocks, bonds) 2. Depending on the moment of the appearance of the Central Bank on the market and the main participants: primary– Central Banks appear on the Russian Securities Market for the first time, the market for new issues, participants – issuers and investors; secondary- the market on which previously issued securities are traded and includes all transactions with securities after their issue, participants are investors and intermediaries, but also issuers. 3. By level of organization: organized by RCB– transactions are carried out according to strictly established rules, the participants are only professionals and there is a trade organizer (exchange). unorganized RCB– participants are both professionals and non-professionals, the rules are less stringent. 4. By method of organization: stock exchange- this is part of the organized market, where the organizer of trade is prof. RCB participant - stock exchange; over the counter or street– this is part of the organized and all of the unorganized; electronic trading of the Central Bank– covers the exchange and over-the-counter markets and involves trading through an electronic network. 5. By territorial coverage: regional central bank– issuers, investors, intermediaries of a certain region; National– market of a specific country; world– a system of interconnected and interdependent markets on a global scale. 6. According to the level of development of the securities market: developed– level of development of the stock market; emerging securities market– stock markets are in their infancy.
51. Security: concept, types, investment qualities.
Security is a document certifying, in compliance with the established form and required details, property rights, the exercise or transfer of which is possible only upon presentation. Economic properties of the Central Bank: negotiability or marketability– the ability of the Central Bank to sell, the degree of its convertibility into cash, the ability of the Central Bank to be sold and bought; Central Bank liquidity– the ability of the Central Bank to quickly and without losses and with minimal transaction costs turn into funds; Central Bank yield– the ability of the Central Bank to generate income for its owner (not only in cash, but also benefits and advantages); reliability– the degree of security of investments in the Central Bank, reflects the stability of changes in the Central Bank to changes in market conditions. Types of securities: 1. by issuer:state central banks– the issuer is government authorities at the federal level and constituent entities of the federation; municipal central banks– local government bodies; corporate securities– Yu.L.; private– f.l. (bill of exchange ). 2.for investors: Central Banks intended only for legal entities. – as a rule, they have a high nominal value, exist in non-documentary form, transactions with them are carried out by bank transfer; Securities intended only for individuals. – relatively low nominal value, in documentary form, payments in cash. and non-cash. Forms; Central Banks intended for both legal entities so for f.l. 3. by period of circulation (existence): urgent Central Bank– are issued on certain period, which is negotiated at the time of issue (short-term - up to 1 year, medium-term - 1-3 (5) years, long-term - over 3 (5) years); perpetual (irredeemable securities)– do not have a period of existence determined at the time of issue, and exist as long as the issuer (shares) exists. 4. in terms of the volume and quality of rights granted: debt central banks– they are based on creditor relations and are characterized by 3 basic principles: repayment, urgency, payment (bonds, bills); equity central banks– reflect the right to a share in something: in management, in the income received by the issuer, the right to a share in the issuer’s property (shares, investment shares, privatization checks). 5. by form of existence: documentary (form) securities– details are recorded on certain paper media. undocumented (without forms)– Central Banks appeared with computer technology, all details are stored as entries in the register of owners of Central Banks. 6. according to the procedure for securing ownership rights to the Central Bank: personalized– the owner is indicated either on the form of the Central Bank or in the register of owners of the Central Bank. bearer– the owner is not indicated, the rights belong to the one who presents the securities and the transfer of the securities is carried out by handing over the securities. (privatization checks). order Central Banks– the Central Bank of the rights under which belong to the person named in the Central Bank, who can exercise these rights himself, or transfer by his order to another person (using an endorsement) (bill, check). 7. by nationality: national (domestic)– issuers and investors are residents of the same state; foreign (foreign)- issuers and investors are residents of different states; Europapers– Central Banks whose nominal value is foreign currency, both for issuers and investors, i.e. These are securities issued by the issuer of one country with a nominal value in the currency of another country and circulating in the territory of 3 countries. 8. on accrual of income according to the Central Bank:profitable Central Bank– give the owner a direct financial income in the form of%, dividends, discount. non-income– do not provide a direct financial result, but give investors additional rights and (or) privileges. 9. according to risk level:risk-free central banks- state federal central banks (but in Russia 1998) ; low risk– sub-federal and municipal central banks, corporate central banks, blue chips ; risky central banks– corporate and private securities. 10. according to the form of issue of the Central Bank for circulation:issuing Central Banks- these are papers that must simultaneously be characterized by a trace. features: assign a certain set of rights to the Central Bank; placed in releases (massive); within the framework of one issue, the rights are equal; registration of the Central Bank is required in the form of registration of their prospectus. (In the Russian Federation these are shares, bonds, issuer options) ; non-emission securities– do not meet the above criteria; these include all other papers. All things being equal market price emis.tsb will be higher than neem, because they are more reliable. 11. by type of use:investment- Central banks are an object for long-term capital investment ; non-investment- are used to generate speculative income and to service payments for goods. 12. by the nature of appeal to RCB market securities– can be traded on the market without any restrictions; non-market central banks– have only the first and only investor and are not freely traded on the market; Central Bank with limited circulation capabilities- restrictions can be on investors (legal entity, legal entity, residents, non-residents), on territory, on terms, on freedom of placement. 13. by the nature of the placement of securities on the market:freely placed- when the investor makes the decision to purchase the securities ; forced placement- the investor is forced to purchase securities.
The main goals of investing in securities. Diversification of investments.
Balanced portfolio of securities.
Securities are monetary documents that certify the ownership or loan relationship of the owner of the document in relation to the person who issued such document (the issuer). Securities may exist in the form of separate documents or entries in accounts. Securities are one of the main types of private investment, whose purpose - distribution of savings aimed at increasing, accumulating funds. Any investor, investing money, pursues
4 goals:
1. investment security; 2. return on investment;3. investment growth;4. liquidity of investments. Investment security
– saved Investments, ensuring their independence from fluctuations in financial conditions. markets. The most basic security criterion is the stability of income generation. Profitability
- the ability of investments to generate additional income, which can be current, i.e. regular. or one-time – speculative. The securities of large joint-stock companies are profitable, because they have access to a wide variety of sources of finance, have large reserves, and therefore can direct part of their profits to pay dividends. But, although the income from these A is large, they are, accordingly, expensive. Income is determined as the ratio of income to the costs of acquiring securities. Investment growth
- increase in the exchange rate of the Central Bank. Only holders of A can increase investments in their pure form. There is a whole class of securities, cat. are called "growth central banks". These are, for example, ordinary A young fast-growing companies operating in advanced industries. Those. such A, as others, bring a low (or zero) level of dividends, but their rate is growing quickly. This happens because they, as a rule, reinvest most of their profits. Liquidity- the ability to quickly and without damage for the holder convert the Central Bank into money. A liquid market has three characteristic features:
a) frequent transactions; b) a narrow gap between the seller’s price and the buyer’s price. The seller's price is the lowest price at which the seller is willing to sell this security. Buyer's price is the highest price that a buyer is willing to pay for a given security. The difference between the buyer's and seller's prices is spread . The smaller the spread, the faster the seller and buyer will complete the transaction; c) a slight fluctuation in prices from transaction to transaction. Transactions can be concluded at different times, in different places, but price fluctuations are small.
Investing in securities offers investors the greatest opportunities and the greatest variety. This applies both to the types of transactions carried out during operations with securities, and to the types of securities themselves. Throughout the world, this type of investment is considered the most accessible.
Investing in securities can be individual or collective. Individual investing involves the acquisition of government or corporate securities in an initial offering or in the secondary market, on an exchange or over-the-counter market. Collective investing is characterized by the acquisition of units or shares of investment companies or funds.
Diversification of Investments- distribution of investor capital between various securities. In world practice, it is customary to limit investments in each type of securities to 10 percent of the total portfolio value. There are diversifications of investments: by type of securities, by economic sectors, regions and countries, maturity (for bonds). Diversification of investments is their distribution across various areas and instruments, which can significantly reduce risks and increase profits.
The main goal of diversification is to reduce possible risks associated with loss of funds. That is, in this case, investments are less susceptible to various disruptions in the markets.
What is needed for Diversification?
1. Limit investment in this type Central Bank 5-10% of the total portfolio value.
2. It is necessary to include in the portfolio bonds, preferred and ordinary A. This is called diversification by type of securities.
3. It is necessary to include in the portfolio central banks diversified by economic sectors, regions and countries.
4. It is necessary to purchase bonds that are diversified by maturity.
Balanced portfolio of securities- a set, a set of securities, in which, according to the investor purchasing them, profitability, liquidity, and reliability are rationally combined.
A balanced portfolio includes securities with different maturities, potential returns and levels of investment risk. Such a portfolio is usually a combination of securities with rapidly changing exchange rates with financial instruments that generate moderate, stable income. The investor determines the relationship between them independently, based on his attitude to risk.
Balanced portfolios involve balancing not only income, but also risk, cat. accompanies operations with securities. Balanced portfolios in def. the proportions consist of securities that are rapidly growing in exchange rates, and of highly profitable securities. A briefcase is a set of finances. assets, cat. the investor has. Ch. the purpose of portfolio formation is to strive to obtain the required level of expected return at a lower level of expected risk. This goal is achieved, firstly, through portfolio diversification, i.e. distribution of the investor's average m/y decl. assets, and, secondly, careful selection of financial assets. tools.
A balanced portfolio of securities is such a set of financial instruments that corresponds to the investor’s idea of the optimal combination of investment characteristics of a security (reliability, profitability, investment growth, liquidity). This means that each investor will have his own balanced investment portfolio.