G

P
U
RO

SECURITIES
MARKETS

INVESTOR
A person, company or institution which
uses either its own savings or loan
finance to acquire financial assets such
as shares and bonds.

Warren Buffett
$58.5 Billion

INVESTING
Expend money with the expectation of achieving
a profit or material result by putting it into
financial schemes, shares, or property, or by using
it to develop a commercial venture.

INSTITUTIONAL
INVESTORS

PRIVATE
INVESTORS

INSTITUTIONAL
INVESTORS

Insurance companies,
pension funds, mutual
funds, bank trust
departments
Have large amount of
capital
Minimize risk in
investing money on
securities markets
Typically invest in large
projects and companies

PRIVATE INVESTORS

individuals, venture
capital companies, and,
sometimes family and
friends
Accept risk- Do not
accept risk
Invest their own money
on shares...
Small amount of capital
Less priority on stock
trading volume

 Ms. Gay Lily

Position: Adviser at NS Bank
Study Finance and Banking
at London University

 Ms. Laura Lana

Position: Adviser at NS Bank
Study economics at Tsinghua
University

 Ms. Kitty Lucy

Position: Financial Manager
of ACE Insurance Company
Study Economics at National
University of Singapore

 Ms. Lotta Mona

Position: Manager Assistant at
ACE Insurance Company
Study Finance and Marketing at
Vietnam Economics University

STOCKS
2 ways
Preferred stocks: Shares that give their
owners first claim on a companys dividends
and assets.
Blue chip stocks: Equity instruments issued by
large, well- established companies and paying
relatively stable dividends.

VARIATIONS OF TRADES
1. Margin trading
Borrowing money from brokers to buy stock
paving
interest on the borrowed money and leaving the
stock with the broker as collateral.

1. Margin trading
Advantages
Disadvantages
Own more shares with Risk also increases
the same capital
Make more profit if the If the shares price falls,
price of shares rises
you have to not only
lose your investment but
also pay back the loan

1. Margin trading
At first

50%margin ->
buy 200
$1000-> buy 100
shares
shares ($10/share)
Interest: 10%
($100/year)

$20/share
By the end ->100x20=$2000
of the year Profit: 20001000=$1000

$20/share
->
200x20=$4000
Profit: 400010001100=$1900

VARIATIONS OF TRADES
2. Short selling
Selling stock borrowed from a broker
with the intention of buying it back later
at a lower price. Repaying the broker and
pocketing the profit.

2. Short selling
Advantages
Buy the shares at
lower price

Disadvantages

have to buy
shares at the
If the shares higher price
price does not than expected
Make profit from the fall, you will
shares you do not
be at loss
Pay the
own
brokers
commission

Select a computer company whose shares were

selling for $30 -> sold short

Stocks price had sunk to $15 per share

Made $15 a share profit

2. Short selling

VARIATIONS OF TRADES
3. Option trading
A stock option: purchase right to buy or sell a
specified number of shares (often 100) of a stock
at a predetermined price during a specified
period of time.

3. Option trading
Advantages

Disadvantages

increase the amount of

shares you buy, while
decreasing the amount
of cash you put out
you can trade any type Not all kinds of share
of potential move in the are for option trading
underlying security
You have the right but
not duty to exchange.
Incorrect options can be
ended up.

Beyond the expiration

day without exercising,
you lose all money
invested

VARIATIONS OF TRADES
A call option: stock option giving the holder the
right to buy shares at a given price.
A put option: stock option giving the holder the
right to sell shares at a given price.

A
CALL
OPTION

$5000 =100 shares

$500-> buy A CALL
OPTION ( The right to
buy 100 shares at $50)
=>CALL IN
The stock price goes to $58
-> sell (profit $300=60%
investment)

$5000
buy the stock

CALL
OPTION

sell for $5800 (profit $800)

=> If there is still time to
expiration, other investors might
think the stock will go still higher
and therefore may be wiling to
pay more than $800

A put option ( the right to sell 100shares at $50)

(PUT TO)

The market price fell to $40

Profit at least $10 per share

A PUT OPTION

 Ms. Sarah Soda

Position: Private Adviser
Study Banking at Tsinghua
University

 Ms. Nan Tucket

Position: Private Investor
Study Finance and Banking
at Beijing University

CORPORATE BONDS
Raise money from investors to finance its
business activities
The company issuing the bonds (the issuer)
pay you interest
pay back the money youve invested (your
principal) on a certain date

Advantages

Disadvantages

Regular interest
payments

If the company becomes

insolvent (that is, it cant pay
its debts), you may not get
interest payments and/or your
capital back

Fixed-term
investment

Risk that no one will want to

buy your bonds on the
secondary market if you do
not want to hold them to the
maturity date

Safety

Debt security ranking may be

low

SOLUTIONS
Financial performance over time
Ability to pay interest on debts
Check your ranking in the list of
creditors

Investin
g
Investor
Stocks

Institutional
investor
Private investor
Preferred stocks
Blue-chip stocks

Variatio
ns of
trades

Margin trading

Corpora
te
Bonds

Option trading

Short selling