![Page 1: © K. Cuthbertson and D. Nitzsche Figures for Chapter 1 MARKETS, FIRMS AND INVESTORS (Investments : Spot and Derivatives Markets)](https://reader036.vdocuments.net/reader036/viewer/2022062300/56649d6c5503460f94a4b760/html5/thumbnails/1.jpg)
© K. Cuthbertson and D. Nitzsche
Figures for Chapter 1
MARKETS, FIRMS AND INVESTORS
(Investments : Spot and Derivatives
Markets)
![Page 2: © K. Cuthbertson and D. Nitzsche Figures for Chapter 1 MARKETS, FIRMS AND INVESTORS (Investments : Spot and Derivatives Markets)](https://reader036.vdocuments.net/reader036/viewer/2022062300/56649d6c5503460f94a4b760/html5/thumbnails/2.jpg)
© K. Cuthbertson and D. Nitzsche
Figure 1.1 : Brokers and dealers
Market Maker A
Market Maker B
Individual Investor
Broker
Institutional Investor
![Page 3: © K. Cuthbertson and D. Nitzsche Figures for Chapter 1 MARKETS, FIRMS AND INVESTORS (Investments : Spot and Derivatives Markets)](https://reader036.vdocuments.net/reader036/viewer/2022062300/56649d6c5503460f94a4b760/html5/thumbnails/3.jpg)
© K. Cuthbertson and D. Nitzsche
Figure 1.2 : Yields on corporate bonds
0
2
4
6
8
10
12
14
T-Bills AAA AAA AAA BBB JunkBonds
6% 6.07% 6.23% 6.25%7.2%
12% +
Increasing risk
![Page 4: © K. Cuthbertson and D. Nitzsche Figures for Chapter 1 MARKETS, FIRMS AND INVESTORS (Investments : Spot and Derivatives Markets)](https://reader036.vdocuments.net/reader036/viewer/2022062300/56649d6c5503460f94a4b760/html5/thumbnails/4.jpg)
© K. Cuthbertson and D. Nitzsche
Figure 1.4 : Simplified balance sheet
(1) Current Assets (e.g. inventories, receivables)
(2) Fixed Assets(2a) Tangibles (e.g. plant and machinery)(2b) Intangibles (e.g. goodwill)
(1) Liabilities (e.g. accounts payable)
(2) Long-Term debt (e.g. bank loans, bonds outstanding)
(3) Shareholder equity (e.g. ordinary and preference shares)
Total Liabilities= 1 + 2 + 3
Total Assets= 1 + 2a + 2b
Note that net working capital = current assets - current liabilities
![Page 5: © K. Cuthbertson and D. Nitzsche Figures for Chapter 1 MARKETS, FIRMS AND INVESTORS (Investments : Spot and Derivatives Markets)](https://reader036.vdocuments.net/reader036/viewer/2022062300/56649d6c5503460f94a4b760/html5/thumbnails/5.jpg)
© K. Cuthbertson and D. Nitzsche
Figure 1.5 : US industrial sectors
0
1000
2000
3000
4000
5000
6000
7000
8000
23/12/88 19/09/91 15/06/94 11/03/97 06/12/99 01/09/02
Entertainment Industry
Oil Industry
Financial Industry
Chemical Industry
Automobile Industry
![Page 6: © K. Cuthbertson and D. Nitzsche Figures for Chapter 1 MARKETS, FIRMS AND INVESTORS (Investments : Spot and Derivatives Markets)](https://reader036.vdocuments.net/reader036/viewer/2022062300/56649d6c5503460f94a4b760/html5/thumbnails/6.jpg)
© K. Cuthbertson and D. Nitzsche
Summary Statistics :(Jan. 95 to Sept. 00)
S&P500 NasdaqMean 1.76% 3.41%Std. dev. 3.94% 7.56%
Correlation : 0.6382(monthly data)
Figure 1.6 : US stock market (S&P500 and NASDAQ)
0
100
200
300
400
500
600
700
800
900
1000
03/01/95 03/01/96 03/01/97 03/01/98 03/01/99 03/01/00 03/01/01
Nasdaq
S&P500
![Page 7: © K. Cuthbertson and D. Nitzsche Figures for Chapter 1 MARKETS, FIRMS AND INVESTORS (Investments : Spot and Derivatives Markets)](https://reader036.vdocuments.net/reader036/viewer/2022062300/56649d6c5503460f94a4b760/html5/thumbnails/7.jpg)
© K. Cuthbertson and D. Nitzsche
0
2000
4000
6000
8000
10000
12000
14000
16000
27/02/88 27/01/90 28/12/91 27/11/93 28/10/95 27/09/97 28/08/99 28/07/01
Hang Seng
Nikkei
S&P
Dax
FTSE
Figure 1.7 : ‘Local currency’ stock indices
![Page 8: © K. Cuthbertson and D. Nitzsche Figures for Chapter 1 MARKETS, FIRMS AND INVESTORS (Investments : Spot and Derivatives Markets)](https://reader036.vdocuments.net/reader036/viewer/2022062300/56649d6c5503460f94a4b760/html5/thumbnails/8.jpg)
© K. Cuthbertson and D. Nitzsche
0
20
40
60
80
100
120
05/02/96 01/12/96 27/09/97 24/07/98 20/05/99 15/03/00 09/01/01
$ per Malaysian Ringgit
$ per Indonesian Ruphia
$ per Thai Baht
Figure 1.8 : Asian crises : spot FX rates
![Page 9: © K. Cuthbertson and D. Nitzsche Figures for Chapter 1 MARKETS, FIRMS AND INVESTORS (Investments : Spot and Derivatives Markets)](https://reader036.vdocuments.net/reader036/viewer/2022062300/56649d6c5503460f94a4b760/html5/thumbnails/9.jpg)
© K. Cuthbertson and D. Nitzsche
Figure 1.9 : Types of traders
• Arbitrageurs : Keep price = ‘fundamental
value’
• Hedgers : Offset risk that they currently
face
• Speculators : Take ‘open’ positions to make
a profit