Đang tải... (xem toàn văn)
The eighth edition of Financial Institutions, Instruments and Markets sees wellregarded authors Christopher Viney and Peter Phillips team up once again to deliver the latest information in financial institutions management.
2016/3/10 IEB Wireframe Page iii http://textflow.mheducation.com/parser.php?secload=0.2&fake&print 1/1 2016/3/10 IEB Wireframe Page i FINANCIAL INSTITUTIONS, INSTRUMENTS AND MARKETS Page ii ASSURANCE OF LEARNING Many educational institutions today are focused on the notion of assurance of learning, an important element of some accreditation standards This eighth edition of Financial Institutions, Instruments and Markets is specifically created to support assurance of learning initiatives designed to draw on and expand key knowledge and skill sets required by graduates such as: communication, initiative and enterprise, self-management, life-long learning, problem solving, technology, teamwork, planning and organising.1 Chapter learning objectives and pedagogical features throughout the text are developed to directly relate to the learning outcomes for your course which may assist instructors in making the collection and presentation of assurance of learning data easier AACSB STATEMENT McGraw-Hill Education is a proud corporate member of AACSB International Understanding the importance and value of AACSB accreditation, Financial Institutions, Instruments and Markets 8e has sought to recognise the curriculum guidelines detailed in the AACSB standards for business accreditation A variety of pedagogical features in chapters are designed to draw on the general knowledge and skill guidelines found in the AACSB standards: communication abilities, use of information technology, ethical understanding, reflective thinking, critical analysis and diversity and multicultural understanding.2 The AACSB leaves content coverage and assessment within the purview of individual schools, the mission of the school and the faculty While Financial Institutions, Instruments and Markets 8e and the teaching package make no claim of specific AACSB qualification or evaluation, we have geared pedagogical features and online assessment tools towards some of the general knowledge and skills areas http://textflow.mheducation.com/parser.php?secload=0.1&fake&print 1/1 2016/3/10 IEB Wireframe Page iv Copyright © 2015 McGraw-Hill Education (Australia) Pty Ltd Additional owners of copyright are acknowledged in on-page credits Every effort has been made to trace and acknowledge copyrighted material The authors and publishers tender their apologies should any infringement have occurred Reproduction and communication for educational purposes The Australian Copyright Act 1968 (the Act) allows a maximum of one chapter or 10% of the pages of this work, whichever is the greater, to be reproduced and/or communicated by any educational institution for its educational purposes provided that the institution (or the body that administers it) has sent a Statutory Educational notice to Copyright Agency Limited (CAL) and been granted a licence For details of statutory educational and other copyright licences contact: Copyright Agency Limited, Level 15, 233 Castlereagh Street, Sydney NSW 2000 Telephone: (02) 9394 7600 Website: www.copyright.com.au Reproduction and communication for other purposes Apart from any fair dealing for the purposes of study, research, criticism or review, as permitted under the Act, no part of this publication may be reproduced, distributed or transmitted in any form or by any means, or stored in a database or retrieval system, without the written permission of McGraw-Hill Education (Australia) Pty Ltd, including, but not limited to, any network or other electronic storage Enquiries should be made to the publisher via www.mheducation.com.au or marked for the attention of the permissions editor at the address below National Library of Australia Cataloguing-in-Publication Data Author: Title: Edition: ISBN: Notes: Subjects: Other Authors/Contributors: Viney, Christopher, author Financial institutions, instruments and markets / Christopher Viney, Peter Phillips 8th edition 9781743079959 (paperback) Includes index Financial institutions—Australia Financial institutions—Australia—Problems, exercises, etc Financial instruments—Australia Financial instruments—Australia—Problems, exercises, etc Money market—Australia Money market—Australia—Problems, exercises, etc Phillips, Peter John, author Published in Australia by McGraw-Hill Education (Australia) Pty Ltd Level 2, 82 Waterloo Road, North Ryde NSW 2113 Publisher: Jillian Gibbs Senior product developer: Lisa Coady Production editor: Natalie Crouch Permissions editor: Haidi Bernhardt Copyeditor: Julie Wicks Proofreader: Anne Savage Indexer: Graham Clayton Cover design: Christa Moffit Internal design: David Rosemeyer Typeset in Chaparral Pro 10/12 by SR Nova Printed in China on 70 gsm matt art by CTPS http://textflow.mheducation.com/parser.php?secload=0.3&fake&print 1/2 2016/3/10 IEB Wireframe Page xiv This book has achieved remarkable acceptance by academics and their students in a significant number of tertiary institutions throughout Australia, New Zealand and Asia, and by professionals within the financial services industry In this eighth edition, Dr Peter Phillips and myself continue to present a finance text for you that is authoritative and scholarly, which at the same time highlights the dynamic, exciting and global nature of financial institutions, instruments and markets The recent global financial crisis gradually became apparent from mid-2007 and had a significant adverse effect on the financial markets from 2008 As the crisis then rapidly evolved it led to an extended period of continuing financial market uncertainty and extreme volatility Major global financial institutions had to be bailed out by government or failed, sovereign debt in a number of countries reached unprecedented levels, economic activity slowed significantly and unemployment rose to very high levels, particularly in the USA and a number of European countries The nature and contagion effects of this evolving global financial crisis are discussed in detail in various chapters of the book Within this context, it is important that the eighth edition should encourage new generations of students and industry practitioners to understand, anticipate and challenge the complex and rapidly evolving structure of the financial system As argued by Nobel Laureate and leading economist Professor Joseph Stiglitz, effective financial market regulation within the context of the integrated global financial markets is required to mitigate future financial crises Interestingly, the government initiated a review of the Australian financial system in 1997 (the Wallis Report) In part, structural and regulatory change that was implemented as a result of that report ensured the Australian financial system came through the global financial crisis relatively unscathed The government has currently commissioned a new review of the system (the Murray Report) The final report is due at the end of 2014 and hopefully the government and regulators will act upon its recommendations of the report to ensure the financial system is made even more efficient and robust One thing is certain, change will occur As students of the financial system you must keep yourself informed about the structure and operation of financial institutions, instruments and markets Importantly, you must think about and anticipate future directions and change When, as a young boy of sixteen I began working in the industry, it was the time of pounds, shillings and pence I was required to record all transactions using a nib pen dipped in ink Daily, weekly, monthly and annual statements were added in my head It was an exciting day when we received a mechanical adding machine—its dimensions were 300×400×200 mm and it could only add, subtract, multiply and divide I had to pull a large handle to input each entry into the machine There has been unbelievable change to the insulated environment of those days In particular, there has been significant deregulation of the financial markets, the development of electronic information and product delivery systems, new and sophisticated financial products, the integration of domestic financial systems into a global financial system and, from time to time, major financial and economic crises To remain relevant in business and finance you must continue to educate yourself and those for whom you may be responsible in the future You must read the daily press and periodic financial journals to keep yourself up to date I suggest you add notations of current and proposed future changes to the financial system to your personal copy of this book This is not a text that you will sell at the end of a particular unit of study, but rather is an important reference that you should continue to use for further studies and on into your professional career I have enjoyed my career working in and teaching about the financial system I encourage you to accept every opportunity that comes your way and I wish you the best of success CH R I S T O P H E R VI N E Y http://textflow.mheducation.com/parser.php?secload=0.4&fake&print 1/1 2016/3/10 IEB Wireframe Page xv C H R I S T O P H E R V I N E Y brings to this book a wealth of industry experience and academic knowledge associated with the international financial markets His appreciation of the nature of both the theoretic and the applied functions and operations of the global financial system is reflected in the clear and interesting presentation of issues in such a way that the reader is motivated to learn Prior to moving into academia Chris spent twenty-seven years in the commercial banking industry including retail banking, corporate lending, risk management, personnel, property, policy and administration His academic career included appointments at Monash University and Deakin University, Melbourne, Australia He has taught in the areas of financial markets, financial institutions management, corporate finance, treasury management and personal financial planning Chris has also taught in Singapore, Malaysia, Thailand, Indonesia and New Zealand He has received university awards for contributions to the internationalisation of teaching and learning programs As the director of the finance international study programs at Monash and Deakin Universities, Chris has taken select groups of students overseas as part of their tertiary studies He has also published research papers on the capital markets, operational risk management, bureau de change, money laundering and education and training Following the passing of Michael McGrath with the first edition of the text, Chris has guided the evolution of future editions of the book and it has now become a principal learning and reference source for undergraduate students, postgraduate students and industry practitioners alike As the text book continues to evolve, a co-author, Peter Phillips, has joined Chris in writing the seventh and eighth editions P E T E R P H I L L I P S has been teaching economics and finance at the University of Southern Queensland (USQ) in Toowoomba, Australia since 1998 Presently, he is an Associate Professor in Finance at USQ He has taught in the areas of financial markets and institutions, portfolio management and corporate finance as well as several economics courses, including macroeconomics and econometrics Peter completed a PhD at USQ in financial economics in 2003 Since then he has published a number of papers on the topic of Self Managed Superannuation Funds (SMSFs) in which he and his co-authors explore various aspects of the portfolios chosen by SMSF investors He has recently completed work on a book that explores SMSFs in more detail http://textflow.mheducation.com/parser.php?secload=0.5&fake&print 1/1 2016/3/10 IEB Wireframe Acknowledgments The challenge of maintaining the currency and relevancy of a book with the scope of financial institutions, instruments and markets is enormous This daunting task is tackled at many levels At one level we are most appreciative of those users of the book, including academics, practitioners and students, who provide ongoing feedback in the form of comment, suggestion and discussion We value your contributions immensely The quality of the production of the book is also dependent on the expertise and hard work of the people at McGraw-Hill Education Australia As authors, we have been very fortunate to have the dedicated editorial support of Jillian Gibbs and Jane Roy We would also like to acknowledge and thank the team at McGraw-Hill including: Lisa Coady, Natalie Crouch, Marisa Rey Bulen, Haidi Bernhardt and Maryann D'Sa CH R I S T O P H E R VI N E Y AND PE T E R PH I L L I P S http://textflow.mheducation.com/parser.php?secload=0.6&fake&print 1/1 2016/3/10 IEB Wireframe Page xvi C H A P T E R 1 A modern financial system: An overview highlights various aspects of the global financial crisis with a special focus on the importance of regulation for ensuring financial markets stability introduces the financial institutions, financial instruments and financial markets that comprise domestic and global financial systems and explains why a stable financial system is important for economic growth provides a concise context that assists the reader to understand the relationships of the material in the following chapters extended learning—globalisation of the financial markets and the drivers of change in the financial system extended learning—the impact of the Asian financial crisis on the financial system C H A P T E R 2 Commercial banks contains a detailed discussion on the commercial bank, including its role, products, off-balance-sheet business, regulation and supervision provides a concise explanation of the capital adequacy and liquidity standards that apply to banks under the Basel II and Basel III Accords outlines aspects of the regulatory response to the global financial crisis extended learning—standardised approach to credit risk extended learning—business continuity risk management extended learning—corporate governance and ethics C H A P T E R 3 Non-bank financial institutions an examination of investment banks, managed funds, superannuation funds, cash management trusts, public unit trusts, life and general insurance offices, hedge funds, finance companies, building societies, credit unions and export finance corporations extended learning—project finance and structured finance C H A P T E R 4 The share market and the corporation considers the management structure of a publicly listed corporation discusses the important roles of a stock exchange in facilitating the listing of a corporation's shares on the exchange (primary market role) and the ongoing trading of existing shares (secondary market role) on the share market examines the managed products and derivative products offered by a stock exchange, including exchange traded funds, contracts for difference, real estate investment trusts, infrastructure funds, options, warrants and futures contracts examines the interest rate market role, the trading and settlements roles, the information role and the regulatory roles of a stock exchange C H A P T E R 5 Corporations issuing equity in the share market introduces the capital budgeting investment decision process; funding issues related to debt and equity; initial public offerings, stock exchange listing rules and alternative forms of equity issues extended learning—Australian Securities Exchange (ASX) listing requirements C H A P T E R 6 Investors in the share market considers the role of the investor in the share market; risks associated with buying and selling shares discusses taxation; financial performance indicators and the pricing of shares introduces share market indices and the interpretation of share market information C H A P T E R 7 Forecasting share price movements examines fundamental analysis and technical analysis approaches to share price forecasting http://textflow.mheducation.com/parser.php?secload=0.7&fake&print 1/3 2016/3/10 IEB Wireframe considers the nature and impact of electronic trading on the markets introduces the random walk hypothesis and the efficient markets hypothesis (EMH) within the context of forecasting share price movements introduces behavioural finance as an alternative theoretical framework to the EMH for understanding share price movements C H A P T E R 8 Mathematics of finance: an introduction to basic concepts and calculations introduces the principles of mathematical calculations that underpin financial market instruments, including simple interest, compound interest, present value, future value, yield, annuities and effective rates of interest C H A P T E R 9 Short-term debt examines the main sources and types of short-term intermediated and direct finance available to a business corporation, including trade credit, bank overdrafts, commercial bills, promissory notes, negotiable certificates of deposit, inventory finance, accounts receivable financing and factoring calculation of prices and yields on discount securities C H A P T E R 10 Medium- to long-term debt identifies the main types of longer-term debt available to a corporation, including term loans, fully drawn advances, mortgage finance, debentures, unsecured notes, subordinated debt and leasing calculation of prices and yields on fixed interest securities extended learning—securitisation Page xvii C H A P T E R 11 International debt markets explores the structure of the international debt markets, in particular the euromarkets (eurocurrency, euronote and eurobond markets) and the US money and capital markets examines the main generic products offered in the international debt markets considers the important role of credit rating agencies in the international debt markets extended learning—novation, subparticipation and transferable loan certificates extended learning—convertible bonds and warrants extended learning—US medium-term notes extended learning—Standard & Poor's credit rating definitions C H A P T E R 12 Government debt, monetary policy and the payments system examines why governments issue short-term and longer-term debt securities, the types of securities and the pricing of those securities It also considers the purpose and implementation of monetary policy; the operation of the payments system, exchange settlement accounts, real-time gross settlement and repurchase agreements extended learning—fixed-coupon Treasury bonds: price calculation using the Australian Office of Financial Management (AOFM) formula C H A P T E R 13 An introduction to interest rate determination and forecasting examines the macroeconomic context and the loanable funds approach to interest rate determination and the impact of changes in related variables considers the term structure and risk structure of interest rates within the context of the expectations theory, the segmented markets theory and the liquidity premium theory extended learning—the yield curve and expectations theory calculations C H A P T E R 14 Interest rate risk measurement identifies methods used to measure interest rate risk and introduces an exposure management system examines interest rate risk measurement models, including re-pricing gap analysis, duration and convexity considers internal and external interest rate risk management techniques C H A P T E R 15 Foreign exchange: the structure and operation of the FX market examines the structure, participants, operation and conventions in the global FX markets http://textflow.mheducation.com/parser.php?secload=0.7&fake&print 2/3 2016/3/10 IEB Wireframe discusses and calculates spot and forward FX quotations considers the impact of the Economic and Monetary Union of the European Union (EMU) C H A P T E R 16 Foreign exchange: factors that influence the exchange rate introduces different exchange rate regimes used by various nation-states in the context of a floating exchange rate, considers factors that affect the determination of an equilibrium exchange rate, including relative inflation rates, national income growth rates, interest rates, expectations and central bank intervention considers the application of regression analysis in the measurement of exchange rate sensitivity extended learning—purchasing power parity C H A P T E R 17 Foreign exchange: risk identification and management recognises FX risk and presents an organisational FX risk policy structure discusses the measurement of transaction FX exposures examines internal and external market-based hedging techniques using derivative products C H A P T E R 18 An introduction to risk management and derivatives introduces the fundamentals of understanding risk and risk management provides a concise introduction to generic derivative products and markets, in particular futures, forwards, option and swap contracts C H A P T E R 19 Futures contracts and forward rate agreements examines the purpose, structure and operation of a futures market, including structuring and calculating risk management strategies considers forward rate agreement contracts and the use of an FRA to manage interest rate risk exposures C H A P T E R 20 Options examines the purpose, structure and operation of options markets introduces option contract strategies that may be applied in a wide range of risk exposure scenarios C H A P T E R 21 Interest rate swaps, cross-currency swaps and credit default swaps examines the purpose of interest rate swaps (including facilitating speculation) and considers the construction of a swap to manage an interest rate risk exposure in the context of international markets, considers the construction of a currency swap to manage both an interest rate exposure and an FX risk exposure introduces the credit default swap and discusses the structure of, and parties to, a CDS http://textflow.mheducation.com/parser.php?secload=0.7&fake&print 3/3 2016/3/10 IEB Wireframe Page xviii Page xxii PART INTRODUCTIONS Introducing each of the six parts is a short overview of the material covered in the following chapters These openers are a helpful introduction to how the key concepts, institutions or instruments work together and how they fit within the larger picture CHAPTER OPENERS Each chapter begins with a short overview of the information contained in the chapter, providing not only an introduction to the chapter, but also a useful study reference LEARNING OBJECTIVES These numbered points clearly outline what each reader should know and be able to by the end of the chapter They will also assist in exam revision Each learning objective notes the numbered section in which the learning objective appears in the chapter They are directly linked to the end-of-chapter summary, which systematically works through each learning objective http://textflow.mheducation.com/parser.php?secload=0.8&fake&print 1/4 call option profit and loss payoff profiles 588–589 premium, factors effecting 647–648 cap, floor and collar: cost-minimisation strategy 651 interest rate levels 650–651 intrinsic value 648 price volatility 649–650 time value 648–649 put option profits and loss payoff profiles 589 option risk management strategies combined-options 655–662 single-option 652–655 options company-issued 176 cost-minimisation strategy 651 nature of 635–636 profit and loss payoff profiles 637–642 call option profit and loss payoff profiles 637–639 covered and naked option 641–642 put option profit and loss payoff profiles 640–641 options market 643–647 Australia 644–647 international 643–644 ordinary share 14, 133, 169, 548 original exposure method 60 out-clause 168 out-of-the-money 648 outright forward purchase agreements 53 over-the-counter contract 141, 559, 621 over-the-counter markets 647 over-the-counter transactions 399 overdraft 50 overdraft facility 16, 291 overseas currency account 562 participating banks 358 participating preference shares 175 passive investment 193 pay anyone 410 payee 294 paying agents 366 payments system 409–410 exchange settlement accounts 410–411 real-time gross settlement 411–412 repurchase agreements (repos) 412–413 pennants (continuation patterns) 239 perference share 145 performance benchmark index 210 performance evaluation (FX management) 551 performance guarantees 53 physical market 141, 587, 604, 636 physical settlement 686 Pillar 60 placement 138, 173 point 503 pole (pennants and flags) 239 policyholder 108 portfolio structuring 11 portfolio variance 194 positive correlation 194, 556 positive covenants 323 positive yield curve 436 posted rate (euronotes) 359 preference share 14, 145, 172 convertible 175 cumulative 175 non-convertible 175 non-cumulative 175 non-redeemable 175 participating 175 redeemable 175 premium 108, 143, 587, 636 present value 162, 470 price risk 460 price series 234 price to earnings ratio (P/E) 201 price-maker 502 pricing financial securities 464–466 primary market 137 primary market transactions 17, 396–397 prime rate 292, 321 principal 262 private equity market 150–151 pro-rata offer 172, 173–174 product controls 580–581 profit and loss payoff profiles 588, 637 profit test 182 profitability 201 program trading 241 project completion 123 project finance 121–123 project sponsors 122 promissory notes (P-Notes) 303, 359 establishing program 304 non-underwritten issues 305 underwritten issues 305 promoter 168 property trusts 101 prospect theory 247 prospectus 138, 168, 331 protection buyer 685 protection seller 685 proxy 169 prudential liquidity 398 prudential supervision 56 commercial banks 56–57 public liability insurance 112 public sector borrowing requirement 429 public sector superannuation fund 104 public unit trusts 101–102 publicly listed corporation 134, 168, 548 purchasing power parity (PPP) 527, 540–542 put bear spread 658 put option 143, 587, 636 uantitative easing quasi-equity 331 quite bearish, but with some risk of a price rise 658–659 quite bullish, but with some risk of a price fall 656–657 quota 533 quoting two-way prices 362 random walk hypothesis 243–244 rate of return 10 rating symbols 372 RBA see Reserve Bank of Australia (RBA) re-pricing gap analysis 467–469 real estate investment trust (REIT) 142–143 real-time gross settlement (RTGS) 411 red herring 364 redeemable preference shares 175 redemption yield 399 reference entity 685 reference interest rate 50, 292, 321, 356 reference rate 585 regression analysis 535 regression coefficient 535 regulation commercial banks 56–57 stock exchange 149–150 superannuation funds 107 reinvestment risk 460 renounceable 208 renounceable right 173 repurchase agreements 54 Reserve Bank Information and Transfer System (RITS) 24 Reserve Bank of Australia (RBA) 24, 29, 56, 404, 406, 410–412 resistance lines 238 responsible entity 97 retail markets 22 retail superannuation funds 105, 113 return line 237 return on equity 201 return or yield 10 reversal patterns 239 revolving credit 356 revolving facility 304 right of foreclosure 326 right shoulder 240 rights issue 138, 172 pro-rata 207–208 risk 7, 10, 165, 203–204, 576 risk component 109 risk management internal hedging techniques 561–564 market-based hedging techniques 558–561 risk management using hedging hedging foreign currency transaction 615–616 hedging the cost of funds (borrowing hedge) 612–614 hedging value of share portfolio 616–617 hedging yield on funds (investment hedge) 614–615 risk structure of interest rates 444–446 risk-free rate of return 444 risks using futures contracts for hedging 617–619 RITS see Reserve Bank Information and Transfer System (RITS) rollover facility 50, 296 rollover fund 106 RTGS see real-time gross settlement (RTGS) runs financial institutions S&P Dow Jones Indices 209 S&P 500 (USA) 210 S&P/ASX 200 (Australia) 210 sale and lease-back arrangement 338 same-day funds 411 Samurai bonds 363 SEC see Securities and Exchange Commission (SEC) secondary market 267, 360, 398 secondary market transactions 17 sectorial flow of funds 29 secured debt 14 securities 18 Securities and Exchange Commission (SEC) 331, 368 securities portfolio 70, 398 securitisation 13, 26, 49, 327, 343–346, 462 segmented markets theory 439–441 self-managed superannuation funds 105 sell-down provision 378 semi-government securities (SEMIS) 404 semi-strong form efficiency 244 semis 328 serial offering technique 362 service fee 322 settlement risk 148, 688 SFE see Sydney Futures Exchange (SFE) share options 135 share portfolio, hedging value of 616–617 share price 201–203 share price index 210 share price movements, forecasting behavioural finance hypothesis 245–249 efficient market hypothesis 244–245 electronic trading 241–242 fundamental analysis: bottom-up approach 231–233 fundamental analysis: top-down approach 226–231 random walk hypothesis 243–244 technical analysis 233–240 share price pattern 233 share price to net tangible assets ratio 203 share purchase plan 173 share splits 207 shareholders' equity 47–48 shares bonus issue 206–207 buying and selling 195–196 cum-dividend and ex-dividend prices 206 electronic trading 146–147, 195 investment in 192–194 preference 14, 175 pricing of 204–208 published information 209–214 splits 207 taxation 196–198 shelf registration 370 short position 497, 607 short straddle 660 short strangle 661 short-call party 639 short-term bank advances 356–357 short-term debt 289 accounts receivable financing and factoring 307–308 bank overdrafts 291–292 calculations: discount securities 298–302 commercial bills 293–298 inventory finance 307 negotiable certificates of deposit 306 promissory notes 303–305 trade credit 290–291 Sibor 357 SIBOR 591 simple interest accumulation 262–264 calculation of yields 266–267 holding period yield 267–268 present value 264–266 single-option risk management strategies 652–655 SMART performance objectives 551 Society for WorldWide Interbank Financial Telecommunications (SWIFT) 410 sole purpose test 107 sovereign debt crisis 6–7 sovereign risk 372 SPAN see Standard Portfolio Analysis of Risk (SPAN) special-purpose vehicle 327 special-purpose vehicle (SPV) 344 specific market risk 65 speculative transactions 497 speculators (futures market) 610–611 spin-off 94 spot market quotations asking for 501 calculating cross-rates 504–505 transposing 503–504 two-way quotations 501–502 spot quotations 503–504 spot transactions (FX markets) 500 spread 503 Standard & Poor's credit rating definitions 381–383 standard contract size (futures contracts) 617–618 standard delivery 608 standard deviation 555 Standard Portfolio Analysis of Risk (SPAN) 607 standardised approach to credit risk 60 standby facility 357 state government securities 403–404 stock exchange 136–137 information role 148–149 interest rate market role 145 managed product and derivative product roles 140–144 primary market role 137–138 regulatory role 149–150 secondary market role 139–140 trading and settlement roles 146–148 stock liquidity 210 stock-market index 209 stock-market indices 209–214 stockbroker 195 straight bond 369, 396 straight corporate bond 145 straight eurobonds 365 Straits Times (Singapore) 210 strategic asset allocation 194 strike price 587, 636 strip of FRAs 623 strong form efficiency 244 structured finance 124–125 sub-prime loans 289 sub-prime mortgages subordinated debt 26, 331–332 subordinated junior debt 124 subparticipation 378 subscribers to an issue 363 superannuation 103 superannuation funds accumulation funds 106–107 Australian assets 103 defined benefit funds 106 regulation 107 sources of funds 103–106 superannuation guarantee charge (SGC) 105 Superannuation Industry (Supervision) Act 1993 (Cwlth) 107 supervisory review of capital adequacy (Pillar 2, Basel II) 66–67 supply of loanable funds 430–431 support lines 238 surplus units 10 swap contracts 15 cross-currency swaps 592–593 interest rate swaps 590–592 swap rate 591 SWIFT see Society for WorldWide Interbank Financial Telecommunications (SWIFT) Sydney Futures Exchange (SFE) 582 symmetrical triangles 238 syndicated loans 123, 357 system being down 408 system liquidity 24 system surplus 408 systematic risk 192, 232 T + 148 tactical asset allocation 194 takeover issues 174 tariff 533 taxation income tax, Australia 197 selling of shares 198 share investment 191 technical analysis 193 charting 236–240 moving-averages models 233–236 definition 193 techniques, interest rate risk 478–479 tender panel 359 tender system 397 term deposits 45–46 term loans 26 interest calculation 323–324 loan covenants 322–323 structures 320–322 term structure of interest rates 437, 462 expectations approach versus segmented markets approach 441 expectations theory 437–439 segmented markets theory 439–441 term-life policy 109 terms currency 501 third party, fire and theft policy 112 third-party policy 112 Tier capital 60 Tier capital (lower) 60 Tier capital (upper) 60 time value of options 649 time-pattern of cash flows 10 tod value transactions 500 tom value transactions 500 tombstone 364 top-down approach 226 total and permanent disablement insurance 110 tradable benchmark index 210 trade bill 293 trade credit 290–291 trade- and performance-related terms 53 traders (futures market) 611 tranches 361 transaction FX exposure 547, 552–553 currency correlations 556–557 currency variability 555–556 net cash flows 553–555 transferable loan certificates (TLCs) 379 translation FX exposure 547 transparency 185 trauma insurance 110 treasury bond 396 Treasury bond pricing 399–400 Treasury bonds 51 treasury division 550 Treasury notes (T-notes) 51, 396, 400–401 pricing 401–402 trend lines 237 triangles (continuation patterns) 238 trust deed 97 trust fund 97 trust indenture 368 two-way FX quotations 509 two-way prices 495, 502 uncertificated securities 147 underwriter 93, 363 underwriting 168 underwriting banks 359 underwriting facilities 54 underwriting syndicate 305 unit of the quotation 501 unit trusts 11 unlisted trust 101 unpledged assets 330 unsecured note 47 unsecured notes 26, 329–331 unsystematic risk 192, 233 uptrend line 237 US commercial paper (USCP) 292, 368, 591 US dollar (USD) 354 US foreign bonds 363 US medium-term notes 380–381 USA, markets in 368–371 USSR 354 value at risk (VaR) 65 value date 500 vanilla swap 591, 673 variable interest rate 321 variable-rate debt 673 venture capital 93 verbal quotations 502 vertical bear spread 658 vertical bull spread 656 vertical takeover 94 very bearish about future price of asset 658 very bullish about future price of asset 655–656 volume of off-balance-sheet business 54–55 wages growth 230 Wallis Report 34 warrant 143–144, 379, 645 warrant issuer 143 weak form efficiency 244 wealth channel 406 weighted average issue yield 397 whole-of-life policy 109 wholesale markets 22 with-recourse factoring 308 working capital 125 Yankee bonds 363, 369 yield 264, 436 calculation of 266–267 holding period 267–268 to maturity 268 yield curve 437, 449–452 zero-coupon debentures 331 ... stability introduces the financial institutions, financial instruments and financial markets that comprise domestic and global financial systems and explains why a stable financial system is important... the structure, functions and operations of a modern financial system; that is, you are going to learn about financial institutions, financial instruments and financial markets Each nation-state... Financial crises and the real economy 1.2 The financial system and financial institutions 1.3 Financial instruments 1.4 Financial markets 1.5 Flow of funds, market relationships and stability Learning