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STOCK MARKET - Coggle Diagram
STOCK MARKET
Common stock
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Common stockholders have the lowest priority claim in the event of bankruptcy (That is a residual claim)
Residual claim: 2 mặt (tốt: nếu DN ptrien > < k tốt: nếu DN phá sản)
-> Stockholders được hưởng lợi cuối sau phần trả cho stakeholders (fixed amount)
Limited liability: lose of common stockholders no more than their original investment > < Unlimited liability
Common stockholders control the firm’s activities indirectly by exercising their voting rights in the election of the BoD
Voting rights
Dual-class firms
2 classes of common shares outstanding, with different voting rights assigned to each class
-> often been used in corporations owned and controlled by a single family or group turning to the public market to raise capital through the issue of new shares
-> To retain voting control over the firm:
issue Class A for founders, family members / issue Class B to public investors
(1) limiting the number of votes per share on one class relative to another (e.g. Class B shares: 1/10,000th vote/ share, Class A shares: 1 vote/ share)
(2) limiting the fraction of the board of directors that one class can elect relative to another (e.g. Class B common stock has the right to elect at least 80% of the members of the board of directors, while Class A common stock have the right to elect no more than 20%)
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-> To offset the reduced voting rights, inferior class (Class B) shares are often assigned higher dividend rights
Proxy voting: A voting ballot sent by a corporation to its stockholders. When returned to the issuing firm, a proxy allows stockholders to vote by absentee ballot or authorizes representatives of the stockholders to vote on their behalf
-> Quyền bầu cử thực hiện qua đại diện (by mail / internet)
Cumulative voting: All directors up for election are voted on at the same time
The number of votes assigned to each stockholder = (The number of shares held) * (The number of directors to be elected)
-> Permits minority stockholders to have some real say in the election of the board of directors, since less than a majority of the votes can affect the outcome.
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Preferred stock
Preferred stock: Similar to common stock in that it represents an ownership interest in the issuing firm, but like a bond it pays a fixed periodic (dividend) payment with no arbitrary pmt (bắt buộc phải trả divi pmt) -> Generally does not have voting rights unless dividend payments are missed and are paid their claim only after all creditors have been paid, but before common stockholders are paid
-> Định giá cổ phiếu theo kiểu trái phiếu vì preferred stock:
(1) have dividends: fixed, quarterly
(2) hybrid security (common stock: dividends is arbitrary (thích thì trả, không thì thôi) and bond: fixed dividend pmt)
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(1) Advantage: Beneficial as a source of funds because dividends on preferred stock can be missed without fear of bankruptcy proceedings
-> beneficial to an issuing firm’s debt holders
(2) Disadvantage: may be a costlier source of funding for the issuing firm than bonds,
firms are generally unable to raise any new capital until all missed dividend payments are paid on preferred stock,
dividends paid on preferred stock are not a tax-deductible expense
Bond hay hơn stock vì: (1) tax shield (2) cost of debt < cost of equity (3) tránh được hiện tượng pha loãng (diluted)
-> Công ty sẽ normally prefer issuing bond (trừ trường hợp bond issued quá nhiều khiến cost of debt increases)
Hedging
In M&A case: ngay khi công ty có nguy cơ bị thâu tính -> phát hành 1 lô cổ phiếu (dưới dạng preferred stock) cho cổ đông hiện hữu với policy: sau n tháng, preferred stock sẽ tự động convert về common stock
-> Mục đích: làm loãng số cổ phiếu mà công ty đi thu mua sẽ có thể nhận được -> công ty đi thu mua chùn bước
-> Dao 2 lưỡi (nếu trong trường hợp không bị thâu tính nữa -> vẫn bị pha loãng)
Overview
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Stockholders are the legal owners of a corporation.
(1) Have a right to share in the firm’s profits (Example: through dividends).
(2) Are residual claimants. (người nắm giữ cổ phiếu -> quyền yêu cầu sở hữu với NHỮNG GÌ CÒN LẠI sau khi other stakeholders đã nhận hết)
(3) Have limited liability.
(4) Have voting rights (Example: to elect board of directors -> thể hiện quyền làm chủ: legal owners)
Stock market
Primary
Primary markets are markets in which corporations raise funds through new issues of securities, most of the time through investment bank
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Investment banks act as principals in firm commitment underwriting.
Gross proceeds − net proceeds = underwriter’s spread
A syndicate is a group of investment banks working in concert to issue stock; the lead underwriter is the originating house
Secondary
Secondary markets are the markets in which stocks, once issued, are traded among investors
Trading
order
A market order is an order to transact at the best price available (# best price) when the order reaches the trading post
-> Chỉ cần state mua cổ phiếu gì, số lượng bao nhiêu
-> Adv: khả năng khớp lệnh cao / Disadv: khó kiểm soát giá -> Ít sử dụng (chỉ dùng khi không quan tâm giá - lúc thị trường có biến)
A limit order is an order to transact at a specified price
-> Limit order = X -> có thể giao dịch với bất kì giá nào (khớp tại giá tốt nhất có thể) miễn < X (nếu market P luôn > X -> hết phiên: huỷ lệch)
-> Adv: kiểm soát giá / Disadv: phải chờ
-> Floor broker: enters the limit order on the order book of the DMM at the post. DMM will monitor the current price of the stock and conduct the trade when, and if, it equals the limit price
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Trading post: Trading occurs at a specific place on the floor of the exchange. Each stock is assigned a special market maker (a specialist) with the power
to arrange the market for the stock, in return, has an affirmative obligation to stabilize the order flow and prices for the stock in times when the market becomes turbulent
Program trading: simultaneous buying and selling of a portfolio of at least 15 different stocks valued at more than $1 million using computer programs to initiate the trades
Ex: program trader can take a long position in a portfolio of stocks and a short position in a stock index futures contract
-> market value of the stock portfolio fall, these losses are partly offset by the position in the futures contract
Circuit breakers give investors time to make informed choices during periods of high market volatility -> a result of potential for increased volatility created by program trading
-> limitations placed on trading when the Dow Jones Industrial Average (DJIA) falls significantly
-> promote investor confidence by giving investors time to make informed choices during periods of high market volatility
-> limit up–limit down (LULD) rules
Flash trading: for a fee, traders are allowed to see incoming buy or sell orders milliseconds earlier than general market traders
-> rapid statistical analysis (with the help of powerful computers) and carry out high-frequency trading (trades involving very short holding periods) ahead of the public market
-> trả phí để tiếp cận sổ lệch trước những người khác (0.0x giây)
-> illegal
Wash trades: high-frequency traders are routinely distorting stock and futures markets by illegally acting as buyer and seller in the same transactions
-> can feed false information into the market and be used to manipulate prices
-> mua vào và bán ra đồng thời trong 1 tài khoản với 1 mặt cổ phiếu -> illegal (tạo khối lượng giao dịch ảo)
Naked access: allows some traders and others to rapidly buy and sell stocks directly on exchanges using a broker’s computer code without exchanges or regulators
always knowing who is making the trades
Dark pools: trading networks that provide liquidity but that do not display trades on order books -> useful for traders such as institutional traders who wish to buy and sell large numbers of shares without revealing their trades to the overall market, detailed information about the volume and type of transaction is left to the trading network to report to its clients if they so desire
-> quyền truy cập ẩn danh -> unfair với market -> SEC
Stock market index
Stock market index: composite value of a group of secondary market–traded stocks. Movements in a stock market index provide investors with information on movements of a broader range of secondary market securities
Price-weighted index: stock prices of the companies in the indexes are added together and divided by an adjusted value
Value-weighted indexes: current market values (stock price × number of shares outstanding) of all stocks in the index are added together and
divided by their value on a base date
Ex:
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VNXALL là chỉ số giá tổng hợp các cổ phiếu quan trọng nhất trên sàn chứng khoán Hà Nội (HNX) và sàn chứng khoán TP.Hồ Chí Minh (HOSE)
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