The capital market and its brief description. General characteristics of the capital market Capital market in the financial system

The capital market is a market, the subject of which is capital (as you already know, capital includes not only money or monetary aggregates). For a more detailed description, economists single out monetary relations and the stock market separately.

Credit and monetary relations are characterized by payment (the loan is issued at a certain percentage), repayment (the loan must be repaid) and urgency (the loan agreement contains the terms for paying the loan and interest on it).

The stock market is a market valuable papers. The issuing enterprise (i.e., an enterprise that issues securities with the permission of the relevant state authorities) gets the opportunity to raise funds necessary for its functioning and development through the issuance of shares. The state cannot issue shares (after all, a share gives the right of ownership to its owner), but has the right to issue (issue) bonds.

In the economic literature, you can find a huge number of definitions of capital. Most universally, capital is an income-generating value.

The price of capital as a factor of production is interest. The owner of capital, providing it to an entrepreneur or a bank for temporary use, thereby waives certain purchases and the right to dispose of it for a certain time. Accordingly, it is quite natural that he should receive

some compensation, i.e. percent. At the same time, it is very important to highlight the concept of real interest rate.

The interest rate we face when investing money in a bank is nominal. It does not take into account the percentage of inflation for us. The interest rate, adjusted for the depreciation of money due to rising prices, is called real (naturally, banks will not name it, because it can be negative, and in this case the depositor loses compared to the person who preferred an expensive purchase to a deposit).

The nominal interest rate can be defined as the ratio of income on loaned capital to the amount of loaned capital.

The interest rate on a deposit (deposit) is usually always lower than on a loan.

When making investment decisions, the firm compares the potential (projected) return on invested capital with the market interest rate on deposits. When deciding on the amount of external financing, the owners of the enterprise are guided by the loan interest rate.

When calculating interest, simple and compound interest formulas are used. When using the simple interest formula, the accrual is always made on the initial (invested) amount, which is beneficial for the investor with short-term (less than 1 year) deposits.

When using the compound interest formula, accrual is made on the accrued amount, that is, when investing 1,000 rubles at 15 percent per annum in the second year, 15 percent will be charged already from an amount of 1,150 rubles. The mathematical formula for calculating compound interest is as follows:

R(1 + r)n, where

R - the amount of the initial deposit;

r - percentage of the deposit in decimal fractions;

n is the number of interest periods.

formula inverse to compound interest

iterates the calculation of the current equivalent of the future amount of money (this process is called discounting):

PV - the current equivalent of the future amount of money; FV is the future amount of money.

The second (right) factor is called the discount factor or FM2, it is found in the corresponding table.

Discounting is of fundamental importance for the investor, since it allows you to compare payments and incomes of different time periods. With the help of discounting, you can calculate different options for investing your money. In this case, by "r" you can mean any factors that reduce your income, for example, the inflation factor or opportunity value.

Questions to consolidate the educational material:

1. What are the characteristics of resource markets?

2. How does demand in resource markets differ from demand in the consumer market?

3. How can future trends in resource markets be predicted?

4. Can nominal and real wages coincide?

5. Is wages the value of labor produced by an employee?

6. What is the uniqueness of land as a factor of production?

7. Do you think that large agro-enterprises have significant advantages over farms? Argument your point of view.

8. What is the peculiarity of the capital market?

9. Can nominal and real interest rates coincide?

10. Why is the deposit (deposit) rate usually different from the loan rate? Which of the above rates is higher? Justify your answer.

11. What is discounting? Tasks and tasks for fixing educational material:

1. You are offered to borrow the amount of 40,000 rubles. at 20% per annum in rubles for a period of 5 years. Interest will be calculated using the compound interest formula. Loan repayment is one-time, after the expiration of the loan agreement (ie, after 5 years). How much will you have to return?

2. What is the current equivalent of 29,000 rubles, which you plan to receive in a year with an expected annual inflation of 17%?

3. You are offered to open a bank account. The bank will pay you 12% per annum in rubles. You predict that inflation will be 18% per year. What is the real interest rate of the bank?

The capital market is the sphere of formation of supply and demand for capital, which ensures the accumulation and redistribution of funds, the movement of fixed capital, profit maximization, and maintaining proportions in the economy. Through market capital, the monetary savings of enterprises, the state, and individuals that exceed their current needs are attracted, and directed as credit funds to the development of production and other sectors of the economy. At the same time, the capital is in the hands of the creditor in the form of securities. The capital market is subdivided into the securities market, the medium and long-term loan market, a certain part of the foreign exchange market and the direct investment market, incl. foreign. Accordingly, the main types of operations in the capital market are the purchase and sale of securities, obtaining bank loans, commercial and mortgage loan . The instruments of transactions on the Capital Market are securities: certificates of deposit, banker's acceptances, etc. The capital market is an extensive network of financial and credit institutions through which the movement of capital is carried out: stock exchanges, insurance companies, brokerage and dealer companies, audit firms, commercial and investment banks, investment and pension funds, loan and savings associations, etc. They act as counterparties of transactions with the ultimate sellers and buyers of capital: commercial and industrial companies, the state and private individuals. The capital market is formed in organic connection with the development of the national and world economy and the credit system. The capital market goes beyond individual countries, being an important part of the world economy. It plays a significant role in the creation of new regional economic complexes, provides structural shifts in the economy, serves structural shifts in the economy, serves foreign trade, export of capital, and international settlements. On the world capital market, large transnational firms and banks, states, government and municipal bodies, international monetary and financial organizations (International Monetary Fund, World Bank, European Bank for Reconstruction and Development) act as creditors and borrowers. The basic indicator in the Capital Market is the interest rate. The structure of interest rates includes discount rates, interest rates on loans, treasury bills, interbank libor rates, etc. The base rate on bank loans to first-class borrowers - the "prime rate" - affects the entire scale of interest rates of the Capital Market. Interest rates of national and international markets are interdependent. National capital markets are subject to fluctuations under the influence of economic conditions and the economic policies of governments. Government influence on the Capital Market is carried out in the form of interventions, the purchase and sale of securities and through credit policy: setting the discount rate of central banks, determining the size of bank reserves, etc. During periods of economic boom and inflation, the government tends to raise the discount rate, which reduces the demand for capital. Features of the capital market of developed Western countries are due to their leading position in the world economy, international monetary and credit relations - a high level of capital accumulation, the presence of a developed credit system and the securities market, and the relative stability of the political regime.

Stages of market evolution and their characteristics.

Much research has been devoted to the study of markets. Most of them analyzed the markets of individual industries and can serve as a reference rather than a systematic classification of the evolutionary stages of market development. Some works devoted to general regularities are of interest, reflecting certain characteristic features of markets as a whole. However, uniform and convenient for practical application there was no classification of markets that would reflect the stages of market evolution.

To create it, it was necessary to find a fundamental criterion that could be used as the basis for such an evolutionary classification of markets. We have determined that the criterion that classifies the stages of market evolution is the distribution of consumers between this market and other markets. This criterion should not be confused with the percentage distribution of the same market between companies trading on it.

We have proposed an evolutionary classification system in which markets are divided into five groups corresponding to five successive stages of development. At each stage, the markets are characterized by the same:

Stages of development of companies trading in this market

Stages of technical development of goods sold on a given market

The psychology of buyers

At level zero, the market for consumers who pay money to use the new offer does not yet exist. There are enthusiasts for whom trying something new is a hobby. For example, a rich person at the beginning of the 20th century could already buy a car and defiantly ride it around the city on a day off. However, the main means of transportation for him continued to be a horse. He temporarily paid both the gasoline market and the hay market.

There are already buyers on the first level market who actually pay money. But they are not leaving the previous market yet.

The market of the second level is characterized by the fact that consumers begin to come to it en masse, leaving the previous market. So Americans and Europeans in the 20s of the last century began to massively change to cars, leaving cabbies unemployed.

The market enters the third level of development when all potential consumers already use the offer of this market and the dynamics of the number of buyers reflects the population growth in the country. The postal service in countries with universal literacy has been a "third stage" market since the invention of the postage stamp.

The fourth stage market is the other side of the second stage market. At the fourth stage of the market, there is an outflow of consumers who begin to use a new offer to replace the existing one.

Principles and functions of the market.

The market is an obligatory component of a commodity economy. Without commodity production there is no market; without a market there is no commodity production. The objective necessity of the market is caused by the same reasons as commodity production: the development of the social division of labor and the economic isolation of the subjects of market relations. These conditions originated and developed as a single whole, as a single process of interaction between production and marketing of products.

Market functions.

The essence of the market is most fully manifested in its functions. The most important functions include: the function of self-regulation of commodity production. It manifests itself in the fact that with an increase in demand for a product, producers expand the scale of their production and raise prices. As a result, production begins to decline; stimulating function. When prices fall, producers reduce production, while at the same time looking for ways to reduce costs by introducing new equipment, technology, improving the organization of labor; the function of establishing the social significance of the produced product and labor costs. However, this function can operate in conditions of deficit-free production (when the buyer has a choice, the absence of a monopoly position in production, the presence of several producers and competition between them); regulatory function. With the help of the market, the main micro- and macro-proportions are established in the economy, in production and exchange; the function of democratization of economic life, the implementation of the principles of self-government. With the help of market levers of influence, social production is freed from its economic unviable elements, and due to this, commodity producers are differentiated.

Operating principles

The functioning of a market economy presupposes the presence of its certain elements, which together constitute a market system.

Producers and consumers are the first and most important element of a market economy. They are formed in the process of social division of labor, when some produce goods, while others consume it. Consumption is divided into personal and productive. With personal consumption, goods leave the sphere of production and are used to meet the personal needs of the population. Productive consumption acts as a continuation of the production process when the goods are used for further processing by other producers.

The second element of the market economy is economic isolation, which is due to private or mixed forms of ownership based on corporate management of production units.

The third most important element of a market economy is prices. They are the subject of special study. Here we only make two remarks. First, prices are formed as a result of supply and demand, the ratio of which fluctuates depending on the current market situation. Second, prices determine the scope of market relations for a given product produced in a given geographical area.

The fourth central link of the market economy are two components

Supply and demand. Demand appears in the market in the form of a need for goods. Supply and demand are essential elements market mechanism, which provide constant communication between producers and consumers of material goods. The fifth element of the market mechanism is competition. It ensures the maximization of profits and, on this basis, the expansion of the scale of production

Competition acts as a form of interaction between market entities and a mechanism for regulating proportions.

The capital market consists of the securities market and the debt market for a period of more than 1 year. The equilibrium point is reached when the supply of deposits equals the demand for loans.

Financial resources circulating in the capital market may take the form of:

• bank loans (loans);
• valuable papers;
• financial derivatives;
• notes and commercial papers.

Classical transactions in the capital market are the purchase and sale of shares, bonds, transactions with mortgage and commercial loans and other similar investment funds.

Structure

The capital market consists of the credit market (credit system) and the securities market. The latter is further divided into three parts:

• primary - acquisition of securities by the first buyer;
• exchange (secondary) - operations on;
• over-the-counter - a secondary market without registration of transactions on the stock exchange. Operations on it are carried out through direct interaction between the participants in the transaction and the negotiation of the terms of sale in electronic form or through a telephone conversation. As a rule, new, unknown and small enterprises use this method.

There is another version of the structure - extended. According to him, the capital market additionally includes the foreign exchange market, the market for derivatives and insurance services. Short-term transactions (up to one year) are often made on them, so they are not always included in the general structure. Although short-term transactions are often found in the credit market as well.

Capital Market Participants:

• primary investor - a person who owns any independent financial resources;
• intermediary - a credit and financial institution that accumulates money capital and turns it into loan capital. After that, for a certain period, the organization transfers it to borrowers on a repayable basis and at a designated percentage. The bank usually acts as an intermediary;
• Borrower - a person who receives funds for use and undertakes to repay them on time and pay interest on the loan.

Functions

The fundamental importance lies in five processes:

• serves the turnover through lending;
• accumulates cash savings of various companies, entrepreneurs, the state and foreign clients;
• transforms cash into loan capital for investment in the production process;
• finances government and long-term consumer spending (covers budget deficits, finances part of housing construction, etc.);
• stimulates the processes of concentration and centralization of capital in order to form large corporate structures.

capital market. Under capital the market for factors of production refers to physical capital, or production assets. Physical capital is divided into fixed and circulating. To fixed capital include real non-expendable assets such as buildings, structures, machinery, equipment. Working capital spent on the purchase of funds for each production cycle. It includes raw materials, basic and auxiliary materials of labor.

Fixed capital serves for several years and is subject to replacement as it wears out or becomes obsolete. Its cost is transferred to the finished product in parts.

Working capital is completely consumed during one production cycle. Its cost is included in the cost of production in its entirety.

In economic theory one must distinguish two concepts- actually capital and capital services.

Capital can be regarded as a stock of capital goods, when the means of production and facilities act as production assets.

Capital services - this is work, the functioning of these production assets (machines, machines, warehouses, etc.).

The main feature of capital is manifested in the following: in order to accumulate a certain initial capital in the future, already today one has to endure the inconvenience associated with the impossibility of immediately using the opportunity cost of this capital in the process of its accumulation.

Demand for capital and its factors. Consider the capital market in terms of supply and demand.

Demand for capital- is the demand for investment funds necessary for the acquisition of capital in its physical form (machinery, equipment, etc.).

In general, in the economy, firms show demand not just for some material goods, but for temporarily free cash that can be spent on these capital goods and returned, giving away part of the profits from their use in the future. Therefore, the demand for capital is the demand for borrowed funds, and the interest on loans is the price of borrowed funds. Loan interest - it is the price paid to the owner of capital for the use of his funds for a certain period of time.

The demand for capital can be represented graphically as a curve with a negative slope \.

Rice. Demand for capital

On the graph, the abscissa shows the amount of invested capital (I), the ordinate shows the marginal product of capital (MPk).

The figure shows that the marginal product of capital decreases as the amount of invested capital increases. This pattern is consistent with the law of diminishing returns.

The marginal product related to capital invested can be expressed as the ratio of future output to its reduction in the present moment.

In practice, today's investments gradually begin to give returns from a certain point in the future over a long period, and in this regard it is convenient to express the marginal product relative to the invested capital as a percentage. This economic category is called return on capital. The level of return on capital tends to decrease as investment funds increase.

Capital supply and its factors. With regard to the supply of capital, households offer investment funds, that is, amounts of money that entrepreneurs use to acquire productive assets.

Graphically, the supply of capital can be represented as a curve with a positive slope (Fig.).

On the graph, the y-axis is the marginal opportunity cost of capital (MOC k). The capital supply curve represents the opportunity cost of capital. To increase the amount of capital, it is necessary to reduce the current production of goods, thereby increasing the marginal utility of their remaining part. At the same time, today's accumulation of capital will lead to the fact that in the future the number of goods will increase and, as a result, their marginal utility will decrease. Thus, the marginal opportunity cost of capital—the ratio of the marginal utility of goods not produced today to the marginal utility of goods that will be produced in the future—increases as the amount of capital invested increases.

Rice. Capital offer.

Equilibrium of the capital market. If we depict the supply and demand curves of capital on the same graph, then the point of their intersection is the equilibrium point (Fig.). It reflects the optimal ratio between the volume of today's goods and their hypothetical quantity in the future and, therefore, indicates the optimal balance of investment capital. At this point, the marginal product of capital equals its marginal opportunity cost. In other words, the marginal increase in the volume of products that will be produced in the future, levels out the time preferences of economic entities, that is, the tendency to increase the utility of goods and services consumed today.

Rice. Capital Market Equilibrium

The tendency of businesses and individuals to prefer, all other things being equal, a real good now than receiving it in the future (for example, children can not wait to receive a gift before the date of their birthday) is called time preference.

Loan capital market. The capital market is primarily a loan capital market, where business entities and individuals provide and receive loans and borrowings (Fig.

).

In the figure, the abscissa axis shows the amount of investment funds (I) - funds that are provided on a loan, and the ordinate axis - the level of interest (r). The point of intersection of the curves of demand for capital and supply of capital determines the equilibrium amount of investment funds (I e) and the equilibrium level of interest (r e).

Rice. Equilibrium of the loan capital market.

Savings are the main source of loan capital supply. As you know, any income remaining after paying taxes is used for the purposes of consumption and savings. It is important to determine how much of their income the consumer will offer to the market in the form of savings at various interest rates. Here a compromise is reached between today's and future consumption. The connection between them is carried out through the rate of interest. For each interest rate level, the consumer determines the utility-maximizing level of present and future consumption.

The supply of money capital in the market is determined by the decisions of the owners of free funds (firms and households). As the interest rate rises, lending money becomes more profitable, so the supply curve slopes upward to the right. The shape of the supply curve is determined by the marginal rate time preference, that is, a relative estimate of consumption over different periods of time, which shows what future consumption an individual is willing to give up in order to have an additional unit of current consumption. The marginal rate of time preference of all consumers determines the opportunity cost of saving.

The demand for capital is to a decisive extent connected with the investment process, that is, the growth or reduction of capital investments in production facilities and equipment, housing construction. Short-term needs for money capital also have an impact on. his demand.

The specificity of the investment process lies in the fact that the costs have to be borne in the present, and incomes appear only in the future, with the completion of the commissioning of production facilities and the release of products. In this regard, the problem of comparing the costs incurred with the receipt of profit in the future becomes relevant.

Evaluation of the effectiveness of the proposed investment is carried out using the interest rate.

The higher the interest rate, the less attractive investment projects the lower the propensity to invest. Therefore, the demand curve for capital slopes downwards to the left.

At the point of intersection of the curves Dc and S c equilibrium is established in the capital market. The balance of supply and demand gives us the level of the market interest rate. At the point E there is a coincidence of the marginal return on capital and the marginal cost of missed opportunities, the demand for loan capital coincides with its supply.

Interest rate (norm) is the price of using money or capital. In other words, it is the ratio of the return on the capital provided on loan to the very amount of the loaned capital, expressed as a percentage.

So, if you loaned 1000 rubles and received an annual income of 50 rubles, then the interest rate will be:

When analyzing the category of interest, it is important to distinguish between nominal and real interest rates. Nominal rate - is the current market interest rate, excluding inflation. Real interest rate - the difference between nominal and inflation rates.

The market interest rate plays an important role in investment decisions. The entrepreneur always compares the expected rate of return on capital with the current market rate of interest. For example, if you intend to invest 100 thousand rubles in a business and receive in a year a return on these investments in the amount of 20 thousand rubles, you can consider this project profitable, since the income level will be 20%:

However, at a market rate of 25%, such a project cannot be considered profitable, since it was possible to put the invested amount in the bank and receive 25 thousand rubles of income. Therefore, an effective investment decision will be when the expected level of return on capital is equal to or higher than the market interest rate. Thus, the interest performs the most important task of the efficient distribution of resources in the market economy, the choice of the most profitable of the possible investment projects.

Chapter 24

Structure of the financial market
State and financial market
Features of the Russian financial market
2. Securities market
Types of securities
Russian securities market
3. Bonds and stocks
Bonds
Stock
The amount of the dividend. Share earnings
Bills
4. Stock exchange and OTC market
Mediation
Members and participants of the exchange
5. Types of transactions in the securities market
Cash and urgent transactions
Purchase and sale of securities
State regulation of operations in the securities market
6. How to read stock indices, quotes and ratings
Stock quotes in Russia and abroad
Bond ratings
financial globalization
conclusions
Questions for self-examination

Financial market(loan capital market) is a mechanism for the redistribution of capital between creditors and borrowers with the help of intermediaries based on supply and demand for capital. In practice, it is a set of credit organizations (financial and credit institutions) that direct the flow of funds from owners to borrowers and vice versa. The main function of this market is to transform dormant funds into loan capital.

1. Money market and capital market

Structure of the financial market

The financial market includes the money market and the capital market (Fig. 24.1). Under money market refers to the market of short-term credit operations (up to one year). In turn, the money market is usually divided into accounting, interbank and foreign exchange markets, as well as the derivatives market.

Rice. 24.1. Structure of the financial market

The accounting market includes the one in which the main instruments are treasury and commercial bills, other types of short-term obligations (securities). Thus, a huge mass of short-term securities circulate on the discount market, main characteristic which are high liquidity and mobility.
The interbank market is a part of the loan capital market, where temporarily free cash resources of credit institutions are attracted and placed by banks among themselves, mainly in the form of interbank deposits for short periods. The most common deposit terms are one, three and six months, with deadlines ranging from one to two years (sometimes up to five years). Interbank market funds are used by banks not only for short-term, but also for medium and long-term active operations, regulation of balances, compliance with the requirements of state regulatory bodies.
Foreign exchange markets serve the international payment turnover associated with the payment of monetary obligations of legal entities and individuals from different countries. The specifics of international payments is the absence of a means of payment generally accepted for all countries. Therefore, a necessary condition for settlements in foreign trade, services, investments, interstate payments is the exchange of one currency for another in the form of the purchase or sale of foreign currency by the payer or recipient. Foreign exchange markets are official centers where currencies are bought and sold based on supply and demand.
Market Derivatives (financial derivatives) are called derivative financial instruments, which are based on other, simpler financial instruments - stocks, bonds. The main types of financial derivatives are options (giving their owner the right to sell or buy shares), swaps (an agreement on the exchange of cash payments over a certain period of time), futures (contracts for the future supply, including currencies, for a yen fixed in the contract).
capital market covers medium and long-term loans, as well as stocks and bonds. It is subdivided into the securities market (stock market) and the market for medium and long-term bank loans. The capital market is the most important source of long-term investment resources for governments, corporations and banks. If the money market provides highly liquid funds mainly to meet short-term needs, then the capital market provides long-term needs for financial resources.
In the market for medium- and long-term bank loans, loans are issued to companies to expand their fixed capital (upgrade equipment and increase production capacity). Such loans, as a rule, are provided by investment banks, less often by commercial ones.
The stock market ensures the distribution of funds between participants economic relations through the issuance of securities that have intrinsic value and can be sold, bought, and redeemed. The main functions of the stock market are:
. in the centralization of temporarily free cash and savings to finance the economy;
. in the overflow of capital with the aim of concentrating it in technically or economically progressive industries and the most promising regions;
. in the elimination of the state budget deficit, in its cash execution and smoothing out the uneven receipt of tax payments;
. in information on the state of the economic situation, based on the state of the securities market.
The stock market can also be viewed as a combination of primary and secondary mining markets. The primary market arises at the time of the issue of securities, it mobilizes financial resources. The main issuers of this market are private companies and government agencies, the main objects of transactions are securities. Placement of newly issued securities occurs either by subscription or open sale.
In the secondary market, these resources are redistributed, and even more than once. In turn, the secondary market is divided into exchange and non-exchange. At the latter, there is a purchase and sale of securities that for some reason are not listed on the stock exchange (for example, through banks).
Various types of securities, forms of deposits and lending have received a general definition in the economic literature and official documents - financial instruments.

State and financial market

The relationship between the state and the financial market is multifaceted. The state can act as a lender and borrower, establish general rules for the functioning of the market and exercise day-to-day control over it, conduct official monetary policy through the market, and even broader economic activities.
The state can also encourage and protect the development of the financial market (for example, stock exchanges in a number of countries are state institutions). After all, the stable functioning of the national economy largely depends on the state of the stock market. First of all, such a policy is carried out through giving the market and its components organizational completeness, standardization of operations and strict control. These issues are handled in market economies by specialized institutions such as the Federal Securities and Exchange Commission in the United States or the Federal Securities Market Commission in Russia.
At the same time, the international financial crisis that began in 1997 clearly demonstrated that the methods of financial market regulation no longer correspond to the increasing level of development and integration of financial markets.
Financial markets are inherently unstable. Increasing interaction of financial markets and increasing volumes of capital inflows increase the risk of instability in national markets and the risk of it spreading to other markets. Therefore, the role of state regulatory bodies has increased with the increase in financial flows, the expansion of financial market instruments, and the emergence of new participants.

Features of the Russian financial market

The so-called emerging financial markets (emerging markets) in developing countries and countries with economies in transition have some features. For them, there are now more opportunities to attract external capital and information about the experience of other countries than during the formation of the financial markets of developed countries in the past. Therefore, processes in new markets are characterized by sharp fluctuations and a faster pace of development.
During the financial crisis in Russia, the need emerged for the formation of such a structure of financial instruments that ensures the reorientation of financial flows to serve the needs of end borrowers, increase the efficiency of the inflow of free resources and their investment in well-thought-out economic projects. In conditions when the decline in the competitiveness of government securities creates real opportunities for the development of other financial instruments, prerequisites are being formed for corporate issuers to enter the Russian financial market.
There was also a reassessment of the role of the financial market. It is no longer considered as a locomotive for the further development of the economy as a whole. Moreover, it is becoming more and more obvious that it is the development of the real sector of the economy, the transition of producers to the predominant use of monetary forms of payment, should become a prelude to the effective expansion of operations of financial and credit institutions with the real sector and the subsequent revival of the financial market.
The peculiarities of the Russian financial market include the importance of its social component. Citizens of Russia require a variety of ways to invest their savings and ensure personal financial security, therefore, when formulating a policy regarding the securities market, the state not only proceeds from the needs of the economy and the availability of investments, but also focuses on taking into account the needs of the population as a whole. The acuteness of social issues in the development of the capital market is also due to the fact that Russian citizens have lost a significant part of their savings as a result of inflation, as well as the activities of financial pyramids that deceived depositors. To address these issues, it was developed and in March 1999 came into force the federal law"On the Protection of the Rights and Legitimate Interests of Investors in the Securities Market".

2. Securities market

Medium- and long-term securities are traded on the securities market. Under security means a document certifying, in compliance with the established form and obligatory details, property rights, the exercise or transfer of which is possible only upon its presentation. With the transfer of a security, all the rights certified by it are transferred in aggregate.
It is customary to call securities fictitious capital for the reason that they are representatives of real capital (real funds) and to a certain extent reflect their value.
In Russia, securities include shares, bonds, deposit and savings certificates, checks, bills of exchange, various government securities, privatization checks (vouchers), options, futures and other documents.

Types of securities

In a market economy, there are many types of securities. They can be classified according to several criteria.
One of them is various groups of emitters. Three such groups are usually distinguished: the state, the private sector and foreign entities. Government securities are issued and guaranteed by the government, ministries and departments or municipal authorities.
Securities of the private sector are usually divided into corporate and private. Corporate securities are issued by non-state enterprises and organizations. Private securities may be issued by individuals (such as bills of exchange or checks).
Foreign securities are issued by non-residents of the country. Securities can be divided into nominal and commercial. The name of the owner of the security is registered in a special register maintained by the issuer or an external independent registrar. A bearer security is not registered in the name of the owner with the issuer.
Another sign of the classification of securities is according to their economic nature. In this case, the following are distinguished: certificates of ownership (shares, checks, money certificates); loan certificates (bonds, promissory notes); contracts for future transactions (futures, options).
All these three types of securities exist and circulate in Russia (Table 24.1).

Table 24.1 Types of securities traded on the Russian stock market

Securities with non-fixed income are, first of all, stocks, i.e. securities certifying ownership of a share in the capital of a joint-stock company and giving the right to receive part of the profit in the form of a dividend. Under Russian law, a share is an issuance security that secures the rights of its owner (shareholder) to receive part of the profit of a joint-stock company in the form of dividends, to participate in the management of a joint-stock company and to part of the property remaining after its liquidation.
Fixed income securities (also called debt instruments) are represented by bonds, certificates of deposit and savings, checks and bills.
B a n i g a t i s — debt obligations of the state, bodies local government, enterprises, various funds and organizations, usually issued in large quantities. They are evidence that the body that issued them is a debtor and undertakes to pay the owner of the bond within a certain period of time interest on it, and upon the maturity of the payment - to repay its debt to the owner of the bond. In either case, the bond represents debt and its holder is a creditor (but not a co-owner as a shareholder). According to Russian law, a bond is an issuance security that secures the right of the holder of this security to receive from the issuer of the bond within the prescribed period its nominal value and the percentage of this value fixed in it or other property equivalent.
Certificate of deposit is a financial document issued by credit institutions. It is a certificate of this institution on the deposit of funds, certifying the right of the depositor to receive the deposit. There are certificates of deposit on demand and term certificates, which indicate the period of withdrawal of the deposit and the amount of interest due. Certificates of deposit are universally accepted by investors, various companies and institutions.
Savings certificate - a written obligation to deposit funds by an individual in a credit institution, certifying the depositor's right to receive a deposit and interest on it. There are savings certificates registered and bearer.
Check - a monetary document of the established form, containing an unconditional order of the drawer of a check to a credit institution to pay its holder the amount specified in the check. As a rule, the payer of the check is a bank or other credit institution that has such a right.
A promissory note is an unsecured promise to pay a debt and interest on it at the appointed time. This type of securities is in last place among the debt obligations of the company. Like checks, bills of exchange are also issued by individuals.
Government securities are debt obligations of the government. They differ in terms of issue dates, maturity dates, and interest rates. In a certain sense, this is an alternative to the issue of money and, consequently, inflation in the event of a state budget deficit.
Currently, in most countries, several types of government securities are circulating: the first is treasury bills with a maturity, as a rule, 91 days; the second - treasury bills with a maturity of up to 10 years; the third is Treasury bonds with a maturity of 10 to 30 years. These types of securities are issued for lending short, medium and long-term public debt. Accordingly, the interest payments on them also differ. So, in the USA in the 90s. they amounted to: for treasury bills - about 6%, for treasury bonds - about 7%. In Russia in the 90s. produced:
. government short-term zero-coupon bonds (GKO) since 1993. The issuer is the Ministry of Finance of the Russian Federation. GKO are issued for a period of 3, 6 and 12 months and are placed through institutions of the Central Bank of the Russian Federation;
. treasury obligations (CO) in non-documentary form in the form of an entry on accounts, as well as GKO;
. federal loan bonds (OFZ) since 1995, circulating in a single system together with GKOs in a non-cash form, with a variable coupon rate and a validity period of more than one year;
. government savings bonds (OGSS) to bearer since 1995, intended mainly for the population;
. domestic foreign currency loan bonds (OVVZ), which are a means of restructuring domestic foreign currency debt.
Along with the central government and its agencies, local governments issue securities for debt lending. This is a different type of securities - municipal bonds. Like other bonds, they are obligations to repay a debt by a certain date with a fixed interest payment. Municipal bonds are also issued in Russia.

Russian securities market

The emerging securities markets in the countries with economies in transition, including the stock market in Russia, are characterized by many common problems. At the same time, the Russian stock market has a number of specific features.
First, the development of efficient securities markets usually accompanies the growth of the entire national economy. In Russia, the origin and formation of the stock market, its certain development took place against the backdrop of a constant decline in production. Such a difference in the evolution of the securities market and general economic processes causes serious crisis phenomena in this market, as evidenced by the experience of 1998-1999. At the same time, the underdevelopment and imperfection of the stock market itself prevent overcoming the tendency to narrow reproduction.
Secondly, the “opacity” of the market (i.e., insufficient or inaccurate information about companies and banks issuing securities), the riskiness of operations on it, the predominance (until 1999) of state debt obligations to cover the budget deficit caused the dominance of short-term valuable papers. And this, in turn, diverts free funds from long-term investment, which is always the most important factor in economic growth.
Thirdly, inflation and inflation expectations have a destabilizing effect on the Russian securities market. The risk of depreciation of money deters investors from long-term investments of a strategic nature.
Foreign experience shows that the negative effects of inflation are overcome to a certain extent by issuing indexed securities. Income on such securities is indexed to inflation. In Russia, the market for indexed stock instruments has not yet been created, which exacerbates the detrimental effect of inflation on the securities market.
The infrastructure of this market is gradually developing, and the level of qualification of its participants is increasing. The Professional Association of Stock Market Participants (PAUFOR) was established to regulate securities trading. The Russian Trading System (RTS) is in operation and develops unified rules of operations. Thus, along with the improvement of state influence on the stock market, there appear sprouts of its self-regulation, which is typical for countries with a developed market economy.
During the transition to the market, a phenomenon also arises that, as a rule, is not characteristic of a developed market economy. We are talking about a sharp stratification of shares. A small (in terms of the number of companies) group of stocks appears, which are usually called “blue chips”. These are the most reliable shares issued by large companies, which, under the conditions transition economy manages to develop quite successfully and make profits.
The blue chips of a very few companies are opposed by all the other stocks of many public companies. These securities are not liquid, the risk of investing in them is high, and it is difficult to sell them on the secondary market. The gap between the position of blue chips and all other stocks in the Russian economy is unusually large. Transactions with blue chips account for about 90% of the domestic turnover of shares.
In 1999, the companies whose shares are considered blue chips included RAO UES of Russia, Lukoil, Mosenergo, Rostelecom, Yuganskneftegaz and a number of others. Their shares are in demand not only by Russian, but also by foreign investors. Blue chips are gradually beginning to enter foreign stock markets.

3. Bonds and stocks

Let us consider in more detail the two main types of securities in the world - bonds and stocks.
The stock and bond markets are closely linked and often money is transferred directly from one to the other. This relationship also applies at the level of joint-stock companies, since many of them issue both types of securities, and the performance of the shares of the company affects the performance of the bonds that stand behind them.

Bonds

The most common type of bonds in the world are corporate, i.e. company bonds.
The attractiveness of corporate bonds (as well as other bonds) is that, unlike shares, they can be sold at an issue price (issue rate) that is lower than their face value (nominal rate), for example, for 98 rubles. instead of 100 rubles. Such a discount from the price is called d and s and o. In addition, an agreement can be reached that the redemption of bonds will be carried out not at nominal, but at a higher Kurd, for example, at 103 rubles. instead of 100 rubles. Thus, there is a surcharge, or even o, which, at the appropriate maturity of the bonds, is presented as additional income (along with interest payments).
The total return (percentage and premium or disaggio) of a bond is considered an important indicator when evaluating the terms of a bond. In most cases, investors purchase these securities at a rate different from the nominal one. Accordingly, the yield and nominal interest on a bond can vary significantly. Income on fixed income securities is calculated using the formula:

Y=N. 100, (24.1)
P

where Y is income; N is the nominal percentage; P is the issue rate of the security.

Example 24.1. Let's say you bought a $100 bond at par, which has an 80% yield and a five-year maturity. Your return on this bond:
0.8 .100 = 80 rubles
Suppose further that the same bond was bought with disaggio for 95 rubles, and not for 100 rubles. The yield on the bond is the same - 80 rubles. What will be the increase or decrease?
80 rub. (percentage) + 10 rubles. (annual interest) = 90 rubles.
The yield is 94.7%. Note, however, that the considered methods are used only to derive approximate returns. Accurate figures can only be obtained using a computer.

Currently, there are many types of bonds in world practice. Here are some of them: mortgages and non-mortgages, guaranteed, with a decreasing fund and expandable, convertible, "perpetual", coupon, discount, with a warrant, with a "floating" rate and "floating" interest, with "litter", etc. For example, "perpetual" bonds are bonds without a maturity date; coupon bonds - bonds containing cut-off coupons, on which interest income is paid after a certain period; discount bonds are those that are sold on the secondary market at a price below par. From the point of view of world experience, the Russian practice of issuing bonds is still quite primitive.
Thus, bonds, as debt instruments, provide more protection against loss of capital investments than stocks and therefore, until recently, traditionally brought less income. The lowest returns to this day usually come from government bonds that are almost completely guaranteed to be repaid.

Stock

Of the securities with non-fixed income, the most important are shares. In order to carry out a public issue (em and with c and yu) of shares, the company is obliged to provide detailed information about its financial position, after which it will be issued an official authorization for the said issue. Typically, a company is required to provide information about its funds (assets), debts, profits and losses for the past few years, all previous securities issues and their conditions.
Once approved, the company announces the issue of shares and distributes them, usually through an investment bank. The first sale of shares (the so-called primary distribution) is made at a nominal price. True, if the issue is distributed over several months, with a high overall price increase, the selling price of the shares also changes upwards.
Today in Russia, shares are issued both in cash and in non-cash form. In the first case, the shareholder receives a special document with a signature and seal, which says that this is a share. With a non-cash form of a share, an entry is simply made on an account opened in the name of the shareholder. In most countries, the cash form of issuing shares is gradually becoming a thing of the past. In the USA, for example, since 1983 all securities of joint-stock companies have been issued only in non-cash form, although certificates of previously issued securities are also in circulation.
After the issue and initial placement, the “working” life of the shares begins. How this happens, let's look at a conditional example.

Example 24.2. Suppose, through the issue of shares, it was possible to raise 10 million rubles necessary for renting a building, purchasing machinery and equipment, hiring workers, etc. In total, 10 thousand shares were sold at 1000 rubles each. Each such share gives its owner the right to receive a dividend. Let's say that if a company made a profit of 2 million rubles this year, then part of this amount (let's say 1 million rubles) is distributed among shareholders by 100 rubles. per thousandth share as a dividend.

One of the main features of a share as a title of ownership is that the shareholder does not have the right to demand that the joint-stock company return the amount paid to him. This is what allows a joint-stock company to freely dispose of its capital without fear that part of it will have to be returned to shareholders. It follows from this that the share is a perpetual security, it is not issued for some predetermined period. The life of the share ends only with the cessation of the existence of the joint-stock company. This occurs during voluntary liquidation, takeover by another company or merger with it, bankruptcy.
A share as a title of ownership has such a basic feature as the right to vote. It implements the possibility of each shareholder as a co-owner of the capital of a joint-stock company to participate in the management of the latter.
Another of the main features of the share is the right to a part of the profits, however, the joint-stock company does not assume any unconditional obligations to make regular payments to the holders of its shares. If the company does not pay dividends, shareholders do not have the opportunity to recover them in court or declare the company bankrupt. They are co-owners of capital and voluntarily take on the risks associated with the possibility of losses or ruin of the company. This implies the possibility of dividend fluctuations depending on the performance of the joint-stock company in a given period. After all, a joint-stock company can decide whether to distribute among the shareholders the profit received by it in full or only a part of it. In the latter case, the other part will be retained earnings remaining at the disposal of the company.
The stock has another very important advantage over hard-interest securities. The growth of their dividends generally outstrips the growth rate of inflation. Inflation - the main scourge of creditors - does not significantly affect the share capital. We can say that stocks have anti-inflationary stability.

The amount of the dividend. Share earnings

The amount of annual dividends depends on the profit indicated in the balance sheet of the joint-stock company. Usually, a joint-stock company seeks to pay dividends, growing as much as possible, and thereby demonstrate to the public opinion its consistent development or imitate it. In addition, when buying, keeping or selling a share, the shareholder proceeds from two main points. The first one is the annual dividend level:

Y=D. 100, (24.2)
P

where Y is earnings per share; D is the annual dividend; P is the purchase price of the share.
It is usually compared to the interest paid on other forms of savings.

Example 24.3. If a share with a nominal value of 500 rubles. purchased at the rate of 2500 rubles. and it pays an annual dividend of 100 rubles, then the earnings per share will be: (100:2500)100 = 4%.

Such earnings per share can hardly be considered attractive to the depositor in comparison with bank investments. In this case, much more important is the expectation that the exchange price of the share will increase and as a result of a profitable sale of the security, it will be possible to make a profit. Thus, the second moment affecting the investor when buying a share is the expectation that its price will rise. In modern conditions, this is the main thing that determines the stock price.

Bills

Promissory notes in a normally functioning economy serve the sales process: in order to sell products and create convenience for the buyer, suppliers defer payment by providing a commercial loan issued by a promissory note.
Accounting or discount of a bill is, firstly, the purchase of a bill before its expiration date at a price below par and, secondly, in banking practice, the discount rate charged by banks upon purchase ( accounting) bills.
In Russia, bill circulation is developing in the conditions of a deep crisis in production and the monetary system. This is where its features come from. A promissory note is a security issued to secure a loan and is not intended to be used as a means of payment. In Russian conditions, the promissory note rather solves the dilemma for the seller: either to receive the buyer's promissory note for the shipped products, or - neither money nor a debt obligation.
In Western practice, a bill as a multi-turn instrument, as a rule, is not used. The recipient of the bill seeks to present it for payment through specialized factoring organizations or bill departments of banks. In Russia, bills have become a kind of money, their surrogate. They are used in settlements between business entities, between firms and government agencies to pay taxes, etc. Bills of exchange are issued in various sectors of the economy by enterprises, ministries, banks, local authorities, the Ministry of Finance, the Treasury, etc. Thus, bills of exchange in Russia got out of control, they are not circulating according to established laws, but according to the conditions determined by issuers, they began to replace money in circulation.
To solve the problems existing in the field of bill circulation, in October 1996, the Association of Bill Market Participants (AUVER) was established. The primary tasks of the association are to collect information about the bill market, including about its unscrupulous participants; provision of listing of bills; development of uniform standards and rules of bill circulation; formation of a clearing house; development of the all-Russian infrastructure of the bill depository, trading system, etc.
In Russia, the Federal Law "On a bill of exchange and a promissory note" dated March 11, 1997 is in force, coinciding with the Geneva Convention on a Uniform Law on a Transfer and a Promissory Note

4. Stock exchange and OTC market

Stocks and bonds have become a popular investment vehicle due to the fact that they can be sold at a profit. Sale and purchase operations are carried out on the securities market, otherwise referred to as the stock market. There are two main types of stock market: stock market and OTC.

Mediation

The gigantic volume and variety of securities make their purchase and sale a difficult task. The sale and purchase itself is regulated by a huge number of rules and restrictions. Besides different kinds securities are sold in different markets.
Those who take on the function of conducting transactions with securities become intermediaries, or, in other words, professional participants in the securities market. They can act both on the stock exchange and outside it, since not all securities are listed on stock exchanges. Spatially, the intermediaries are separated, but they are interconnected and form a single whole, constantly coming into contact with each other. It is this unity that is called the securities market.
In a single stock transaction (whether on the stock exchange or not), three parties are involved: the seller, the buyer, and the intermediary. The mediator can act in two ways. First, by acquiring securities at his own expense, he becomes their owner for a time and receives income in the form of the difference between the buying and selling rates. Such intermediaries are called dealers. Secondly, he can work as an attorney or for a certain percentage of the transaction amount, i.e. for a commission, simply by accepting orders from their clients for the purchase and sale of securities. In this case, he is called a broker, or manager. In addition, on his own behalf, he makes transactions with other people's securities transferred to him in trust management for a certain period.
All types of professional activity in the securities market are developing in Russia. In addition to dealer and brokerage activities, these are clearing (activities for determining mutual obligations in the securities market), depository activities (storage of securities certificates), activities for maintaining a register of securities owners and other intermediary services.
Traditionally, the most representative securities market are stock exchanges.

The concept of the stock exchange and exchange systems

Stock Exchange is a part of the securities market (shares, bonds, treasury bills, bills, certificates) that regularly functions and is organized in a certain way, where purchase and sale transactions are made with these securities through the mediation of members of the exchange.
The exchange strictly ensures that none of the sellers or buyers can dictate prices. Finally, all transactions are concluded by open auction and full information is provided about each of them. First, it enters the electronic scoreboard of the exchange, and then is published in print.
Fund valuables are securities with which transactions on the stock exchange are allowed. Trading is carried out either in batches for a certain amount, or by types, while transactions are concluded without the presence of the securities themselves on the exchange.
The exchange rate of securities is determined by the following factors:
. yield (dividends, interest) current and expected;
. the size of the bank interest rate (loan interest), the price of gold, individual goods and real estate, since investments in bank accounts, gold, goods and real estate are an alternative to the application of temporarily free funds;
. stock market speculation.
Institutions similar to stock exchanges functioned in Babylon, Ancient Egypt and Phoenicia. But the first permanent exchange arose in 1406 in the Dutch city of Bruges near the house of Van der Burs. The coat of arms was painted on the house in the form of three purses, which in late Latin were designated by the word "bursa". From here, the commodity and stock markets that were created later began to be called exchanges: in Antwerp (1460), Lyon (1462), Toulouse (1469), Amsterdam (1530), Paris (1563), Hamburg (1564), Cologne (1566), Gdansk (1593), Berlin (1716), Vienna (1771). The first St. Petersburg stock exchange in Russia was organized in 1703. The first international stock exchange was in Antwerp, which had its own permanent premises, above the entrance to which there was a famous inscription: "For trading people of all peoples and languages." However, all of these were commodity exchanges, although stock departments were gradually formed on a number of them.
With the founding of the Dutch East India Company in 1602, the role of the world's most important trading center passes to the Amsterdam Stock Exchange. Here, for the first time, futures transactions appeared, and the technique of exchange operations reached a fairly high level. Therefore, the Amsterdam Stock Exchange, organized in 1608, is considered the first stock exchange. Then stock exchanges arose at the end of the 18th century in Great Britain, the USA and Germany, and in 1878 in Japan. The first stock department as part of the St. Petersburg Stock Exchange was created in 1900, but there were no special stock exchanges in pre-revolutionary Russia. During the NEP period, the exchange played a prominent role, but by the 1930s. their activities were terminated.
Exchanges are divided into commodity (wholesale transactions with grain, metals, oil and other so-called exchange commodities), currency and stock (transactions with securities). From the end of the 19th - beginning of the 20th century. stock exchanges have become the most important centers of national and international economic life.
Exchanges were created as private, public or state organizations. In Russia, in accordance with the current legislation, stock exchanges are created as commercial partnerships.
Currently, there are about 200 stock exchanges in the world. Each of them has its own characteristics, often significant. Even in Western Europe, despite attempts to create a single securities market, significant differences remain in the rules for the operation of stock exchanges.
The largest are those national stock exchanges located in the main financial center of the country. They concentrate the shares of companies with a nationwide scale of operations. Provincial exchanges are gradually losing their positions. This is how a monocentric exchange system develops. In its most complete form, it is presented in England, where the London Stock Exchange is called the International Stock Exchange, since it has absorbed all the exchanges not only in Great Britain, but also in Ireland. The exchange systems of Japan and France are also monocentric, but there are still provincial exchanges, but their role is very insignificant. A similar system has developed in Russia, where the main stock exchanges are concentrated in Moscow.
In a number of countries, a polycentric exchange system operates, in which approximately equal positions are occupied by several centers of stock trading. This happened in Canada, where the exchanges of Montreal and Toronto are leading, and in Australia, where the leadership belongs to the exchanges of Sydney and Melbourne.
The US stock market is specific in this regard: it is so vast that there was a place for the generally recognized leader - the New York Stock Exchange, and another major exchange - the American Stock Exchange; in addition, a number of large provincial exchanges operate in the country. Their number has decreased over the post-war years, but those who remain are quite firmly on their feet. Therefore, the US exchange system must be classified as a mixed type.

Members and participants of the exchange

The activities of the exchange are strictly regulated by government documents and the charter of the exchange. The charter first of all determines the possible members of the exchange, the conditions for their admission, the procedure for the formation and management of the exchange. In Russia, any professional participants in the securities market can be members of the stock exchange. Thus, intermediaries reign on the exchange.
The Russian Stock Exchange organizes trading only between members of the exchange. Other participants in the securities market may make transactions on the stock exchange exclusively through the mediation of members of the stock exchange. Stock departments of commodity and currency exchanges in accordance with the Federal Law "On the Securities Market" are also recognized as stock exchanges. According to Russian legislation, it is not allowed: unequal position of members of the stock exchange, temporary membership, as well as the lease of seats and their transfer as a pledge to persons who are not members of this stock exchange.
The range of securities with which transactions are carried out on the stock exchange is limited. To be listed as a listed company (in other words, for a firm's shares to be listed), a firm must meet the requirements set out by members of the stock exchange in terms of sales volume, profit margins, number of shareholders, market value of shares, frequency and nature of reporting, etc. Members of the exchange or the state body that controls their activities establishes the rules for conducting exchange operations, the regime governing admission to the quotation. The procedure for including shares in the quotation list of the exchange is called l and s t and n g o m.
The number of joint-stock companies is measured in tens and hundreds of thousands (in the USA - several million), and on the stock exchanges, the number of listed companies is in the hundreds, at best, in the thousands. Thus, the shares of about 2,800 companies are listed on the London Stock Exchange, and about 1,700 are listed on the New York Stock Exchange. These are the largest and most well-known joint-stock companies in the country.
In Russia, the inclusion of regional trading exchange floors in the trading system of the Moscow Interbank Currency Exchange (the largest stock exchange in the country) is the first step towards the formation of a single all-Russian securities market. In turn, the infrastructure base created in the regions with the help of a trading network for government securities opens up the prospect of introducing a high-tech trading system for non-government stock instruments. Until now, regional isolation, along with the underdevelopment of infrastructure, are a serious obstacle to the mobilization of relatively free funds.
Partnerships, limited liability companies and closed joint-stock companies should be excluded from potential applicants for the exchange quotation, since their contributions and shares cannot be traded on the market.
As for joint-stock companies of open type, they differ in the scope of their activities. For large and rapidly growing companies, it is not difficult to attract attention to their shares, while for the rest it is a formidable task. Therefore, from the point of view of the intensity of circulation of shares, joint-stock companies are stratified. For some papers, supply and demand are so great that transactions are made not just every day, but many times a day, while for others - once every few weeks or months. Hence the conclusion: in the first case, the quotation on the stock exchange is appropriate, in the second - no. After all, you have to pay for a quote, and why pay if there are few transactions.

OTC market

It is clear that the existence of an over-the-counter securities market is necessary. It presents a lot of reputable firms, whose size "does not reach" stock exchange standards (primarily in terms of the number of shares outstanding and the degree of their reliability). The over-the-counter market is also an "incubator" where companies are grown, whose shares eventually move to the exchange.
The basis of the over-the-counter market is a computerized communication network, through which information about billions of quoted shares is transmitted. At least some of these papers are characterized by a higher level of speculation. Therefore, many "players" prefer the over-the-counter market. Information about the prices prevailing on it during the day, about the volumes of completed transactions is regularly published along with the exchange turnover data.
Unlike the stock exchange, the over-the-counter market is not localized and is an interconnected network of firms that deal in securities. The size of OTC markets varies significantly depending on the countries where they operate. For example, in the United States, in terms of the value of transactions, it is practically equal to the turnover of the central, New York Stock Exchange; in Japan, it makes up only a small fraction of the exchange turnover. In Russia, the main turnover of securities falls on the over-the-counter market.
The main feature of the OTC market is the pricing system. A firm that trades in securities over the counter operates as follows: it buys them with its own funds and then resells them. The client is not charged a commission, as on the exchange, but the securities are sold to him at a premium to the price at which they were acquired by the firm, or bought at a discount in relation to the price at which they will be resold in the future. This markup or discount forms the profit of the intermediary firm.
The main sale of government bonds and shares of small firms that are not included in the exchange lists passes through the over-the-counter market. Over-the-counter trading in securities is carried out through personal and telephone contacts, as well as through the electronic over-the-counter market, which includes special computer telecommunication systems.
The exchange mechanism, developed back in the Middle Ages, is less flexible than the over-the-counter mechanism. Of course, technological progress is leading to the development of over-the-counter trading systems that are cheaper, more flexible and more efficient. But their main characteristics - information transparency, warranty and reliability - are inferior to those of the exchange. It is these qualities that create certain advantages for exchange trading at the stage of formation of the stock market.

Stock exchange and over-the-counter market models

What else are the differences between the Anglo-American model of the stock market and the Western European one? Schematically, their essence can be depicted as follows: in one model, the controlling stakes are usually small and therefore most of them are freely traded on the market; in another model, the vast majority of shares are in controlling stakes and, consequently, relatively few shares are traded on the market. The first model can be designated as Anglo-American, the second as Western European (continental).
Despite the conventionality of such a scheme, the differences between the models reflect the essence of what is happening in real life. In the Anglo-American model, there are many shares on the stock exchange and over-the-counter market, which means that there is a high probability of having a large number investors willing to buy and sell them. Consequently, it is possible to form a block of shares, to seize control of the company. In the Western European model, this possibility is less likely. The transfer of the company from hand to hand can only occur at the request of the former owners. The turnover of shares on the stock exchange and the over-the-counter market is small.

Russian stock market

The Russian securities market is an emerging market. The total capitalization of the Russian stock market reached $50 billion in 1998. The average daily trading volume in dollar terms until August 17 In 1998, it was about $100 million. According to the growth rate of these indicators, the Russian stock market was the leader among emerging markets. At the same time, less than 1% of extrabudgetary investments were financed through the issuance of corporate securities, compared to 10-40% in countries with developed economies. Therefore, it is too early to talk about any established model of the Russian securities market.
In Russia, the development of the stock market took place in two directions: the creation, firstly, of the actual stock exchanges and, secondly, of a universal over-the-counter market for various financial instruments and currencies, which also provides participants with a full range of services - from organizing trading to clearing and settling both securities and cash.
An example of the first direction is the Moscow Interbank Currency Exchange (MICEX), the second - the Russian Trading System (RTS). To date, there remain differences in traded financial instruments. While the RTS continues to be the organizer of trading in shares, the previously specialized exchanges for trading shares and bonds (for example, the Moscow Stock Exchange) are trying to form the currency market and the derivatives market. The pioneers of universal stock exchanges are the MICEX and the St. Petersburg Currency Exchange (SPCE), which since 1997 have been organizing trading in virtually all types of financial instruments and currencies. On the whole, the trend towards the universalization of the stock market in Russia can be traced.
In the short and turbulent history of the development of the Russian stock market, almost every year is unique and distinguished by special events. Among them are the launch of the government securities market (1993), the admission of non-residents to the Russian government securities market (1996). Beginning in October 1997, the stock market entered its most difficult stage in its history. The instability of the situation in the Russian financial (including the stock) market, which had been growing from that moment on, ended in August 1998 with a sharp aggravation of the situation, affecting all segments of the market. The scale of the market shocks, combined with the destabilization of the banking system, give grounds to characterize the current situation as a systemic crisis.
In order to partially overcome market uncertainty, restore market benchmarks, maintain a functioning market infrastructure and offer commercial banks participating in the government securities market an alternative instrument for regulating liquidity, from September 2, 1998, the Bank of Russia issued its own short-term zero-coupon bonds (OBRs). Unlike GKO-OFZ bonds of the Bank of Russia are not an instrument of budget financing. In general, the experience of issuing OBRs can be assessed as positive: they ensured the continuity of securities trading on the stock market, although they could not become a financial instrument that would divert significant ruble funds from investments in foreign currency. Since mid-February 1999, an increase in activity has been noted on the corporate securities market: trading volumes have noticeably increased, the share price has risen to the level at the end of August 1998, and a qualitative change in the structure of the market is taking place. A distinctive feature of the new GKO-OFZ market is the longer-term nature of bond debt, which is explained by the dominant share in the total volume of OFZ issues with long maturities circulating on the bond market.

5. Types of transactions in the securities market

When classifying securities transactions, several criteria can be used. The most important is the division into cash and urgent transactions. There are also arbitrage transactions based on the resale of securities on various exchanges, when there is a difference in their rates, and package transactions, which are transactions for the purchase and sale of large lots of securities.

Cash and urgent transactions

Typical for cash transaction is that its execution mainly takes place immediately after the conclusion of the transaction. In Germany, for example, the transaction must be completed no later than the second business day after the conclusion of the transaction. In the United States, there are differentiated terms for performing cash transactions - from immediate payment to five days. The same principle applies in the UK. In Japan, depending on the contract, cash transactions can be completed from one to 14 days; in Switzerland, they rely on up to five days for their implementation. In Russia, such transactions are carried out, as a rule, within two to three days.
It should be noted that the securities themselves do not physically participate in transactions, because, as a rule, they are kept in special bank accounts. In order to transfer the sold securities from the bank to the buyer, their owner writes out a special check for the securities. After the introduction of complex computer systems for exchange settlements, the need to issue checks for securities has disappeared and all transfers are carried out using a computer.
Urgent operations are, in essence, supply contracts, by virtue of which one party undertakes to hand over a certain amount of stock values ​​​​by a specified date, and the other - to immediately accept them and pay a predetermined amount. Futures transactions are usually concluded for a period of one to three months, rarely - for six months. Such operations are not allowed in all countries. Thus, in Germany in 1931, as a result of the world economic crisis, they were banned, and only since 1970 forward transactions with stock values ​​were again allowed in a modified form and with certain restrictions. According to Russian law, the execution of a transaction and its payment can be separated from each other by no more than 90 days. Futures transactions are widely practiced in the USA and Switzerland.
Futures operations are represented primarily by simple futures operations, futures and options exchange represented by its clearing (settlement) house. The futures market has a lot of liquidity, since the standard rules provide the possibility of free trading for an arbitrarily large number of participants.
If such a condition is added to the futures contract as the right to choose for a certain fee (premium) to buy (sell) a security at a price predetermined in the contract or to refuse the transaction, then this additional parameter turns the futures transaction into an option.

From English. option - choice.

Thus, the considered transactions perform the function of hedging, i.e. limiting risks when conducting various exchange operations.
As a rule, futures transactions with stock values ​​are clearly speculative in nature. Stock exchange speculators playing for a fall (the so-called bears) enter into essentially fictitious sales (called short sales in the exchange lexicon) by the deadline. They sell securities that they do not yet have at the time of the transaction (in other words, they speculate on the depreciation). Bull traders (so-called bulls) make purchases of securities for a period in anticipation of an increase in the price (called long transactions).

The names "bulls" and "bears" are interpreted as follows: bulls are like bulls who seek to "raise on their horns"; bears are bears who "crush under themselves."

The transaction should be completed, as a rule, by the end of the month.
"Bears" hope that shortly before the end of the deal, i.e. at the end of the month, they will be able to buy securities at a lower rate and sell them at a higher price set in the futures contract, and thus receive the exchange rate difference. Bulls, on the other hand, assume that they will subsequently be able to sell securities at a higher rate. To do this, they acquire securities at the rate set in the transaction.

Purchase and sale of securities

In a simplified form, the purchase and sale of securities is as follows. The investor (buyer) instructs the broker to buy 100 shares of company X at the rate of 150 rubles. for one share. The seller instructs his broker to sell the same batch of similar shares at the same rate. Brokers turn to a specialist dealer who forms a package of bids for company X. Seeing that the proposals received by him are mutually satisfactory and no other proposals are received, the dealer sets the official share price at the level of 150 rubles. and notifies both clients of the transaction.
In reality, the dealer receives a much larger number of orders to buy and sell the same securities with requests for quite a variety of rates. Its purpose is to determine the rate at which most applications can be satisfied, and the difference between supply and demand. It is this information that he announces on the stock floor in search of missing securities or in order to sell their surplus. The dealer's main goal is to balance supply and demand and sell all batches of securities. Since information about supply and demand is constantly received, the rate of securities also undergoes certain changes during the day. Therefore, the exchange lists fix rates at the time of the opening of the exchange and at the time of its termination.
If the transaction is completed, then fund fees are deducted from the sale price of stock values, including fees (remuneration) of intermediaries, stock exchange tax and sometimes some other payments.
Courtage, which consists of commissions, is not the only source of intermediary income. Another source goes back to speculation, and this is understandable. An exchange, where neither sellers nor buyers see each other, where thousands of transactions can be made within a few hours, cannot but be a place of speculative, i.e. calculated on purely operating income activities.
First of all, the companies themselves speculate on the stock exchange, sometimes putting into circulation "fake" stock values ​​or engaging in so-called cross-singing - repeated buying and selling of their own securities to create the illusion of great demand for them.
On the stock exchange, as noted above, brokers, brokers and, in general, any investors who try to predict the dynamics also speculate. exchange rates in urgent (futures) transactions.

State regulation of operations in the securities market

In the context of the weakening of state intervention in economic life, which is observed in most countries, the state regulation of securities has not been abandoned anywhere. This would not only be undesirable, but even unrealistic. One can see the objective process of the growth of money capital, the growth of exchange activity, which significantly exceeds the increase in the turnover of real capital, and, accordingly, exchange speculation, the real danger of exchange crashes with all possible economic and social consequences. All these problems still do not lose their sharpness today and do not allow abandoning the established system of state regulation.
There is also a process of qualitative changes in the stock market, which requires an adequate response from the regulatory authorities. These changes are happening in two directions. First of all, the so-called globalization of the securities market is taking place, i. the formation of a world market, of which all national markets become parts. The current stage is characterized by the increasing overcoming of the national boundaries of exchange operations, the simultaneous circulation on the national markets of securities denominated in different currencies, the emergence of cosmopolitan securities such as Eurobonds, Euroshares and Euronotes. The expansion of the issue of securities by TNCs forces the regulatory authorities of all developed countries to follow the changes taking place in the legislation of partner countries, to compare their laws and regulatory systems with them. And within the EU, there is an official process of creating a single legal space for the functioning of national securities markets of the member countries of this Union.
The second direction is the modification of instruments, forms of activity, as well as the subjects of the securities market. The emergence of automated securities trading systems, the mechanism of speculation, especially derivatives, which include options, futures, swaps, does not fit into the traditional understanding of the securities market.
In Russia, at the state level, a market regulation system is also being created and its functioning is ensured, the basis of which is the Federal Law “On the Securities Market” dated April 22, 1996. At the same time, the regulatory system is developing towards greater detail and tightening state control over the activities of the securities market . The federal executive body responsible for implementing state policy in the area of ​​the securities market, controlling the activities of professional participants in this market, and ensuring the right to invest shareholders and depositors is the Federal Commission for the Securities Market.
In addition, the state itself, represented by the Ministry of Finance of the Russian Federation, is the largest borrower in the securities market and has a direct impact on its quantitative and qualitative characteristics. It is also the largest holder of securities of Russian companies and is the largest seller on the corporate securities market.

6. How to read stock indices, quotes and ratings

As Russian and foreign practice testifies, the real emerging picture of supply and demand can be distorted mainly by speculative operations. However, despite this, the exchange (more precisely, stock indices and quotes) remains a fairly accurate indicator of the state of affairs in the economy.

Stock Indices

To assess the movement of exchange rates on all exchanges, an index of the stock price is calculated. As a rule, a country is dominated by one, at most two stock price indexes, in the same way that one dominant stock exchange stands out. Market price index of each share (bond) is defined as the product of its rate by the number of shares of this type listed on the stock exchange, divided by the face value of the share. In the future, share price indices are used to calculate the aggregated exchange index. The most common among them is the Dow Jones (Dow Jones, DJ) New York Stock Exchange. According to its model, the indices of all other exchanges are calculated. The Dow Jones Index has been published since 1884 by Dow Jones & Co. Inc., publisher of the Wall Street Journal and Barron's; it is calculated as an index arithmetic average exchange price (rate) of shares of leading American companies.
The Dow Jones Index is calculated: a) for the shares of 30 leading US industrial corporations that have the greatest prestige from the point of view of investors (Dow Jones Industrial Average, DJIA), among them - General Motors (General Motors), General Electric (General Electric ), "Texaco" (Texaso), etc.; b) for shares of 20 leading transport companies; c) for the shares of 15 leading public utilities companies.
The most important is the industrial index. The total indicator (composite) of the Dow Jones index is determined for all these 65 companies. If a company whose shares are included in the index is taken over or merged with another, then its shares are excluded from the index and replaced by shares of a new large corporation. A list of these companies is published daily by The Wall Street Journal.
It should be noted that the Dow Jones index is only meaningful when it is possible to regularly compare its current and previous values. For example, an index value of 10,870.5 is compared to its value of 10,871.71 the day before. The difference between daily values ​​is measured in points. Thus, the difference in index values ​​- 1.21 (10,870.5 - 10,871.71) indicates a drop in share prices by 1.21 points.
The value of the Dow Jones index goes far beyond the US. Since about 50% of the total exchange turnover of developed countries is concentrated on the New York Stock Exchange (the total value of shares quoted on it is estimated at several trillion dollars), the movement of the index in question serves as an important signal in the financial and economic affairs of countries with a market economy. With this in mind, it is calculated on the exchanges and officially announced every half an hour.
However, the Dow Jones index has serious competitors. Thus, since 1957, the largest US securities market research firm, Standard and Poor's (Standart and Poor's 500 Index, S & P 500), has been calculating the index of the weighted average share price of 500 leading American companies. This index is more representative because it covers 400 industrial, 20 transport, 40 utilities and 40 financial companies. Separate (independent) indices are also calculated for these groups of industries. But the weighted average share price index has a drawback: its numerical value is many times less than the value of the Dow Jones index. Let's say when the Dow Jones is 2965.56, the Standard and Poor's is only 377.75. Therefore, market fluctuations, measured by the latter indicator, are not so noticeable.
In turn, the American automated quotation system of the National Association of Stock Dealers (NASDAQ) has a large share of shares of companies in the high-tech sector, which determines a number of psychological characteristics investors and players in this market. For example, there is a great temptation to jack up the stocks of fast-growing companies, "to catch a rising star." As a result, the shares of some companies are highly overvalued.
In addition to these main indicators, each of the exchanges and the over-the-counter market calculate their own indicators to characterize the dynamics of the prices of shares of companies registered on them. The New York Stock Exchange introduced such a measure in 1966. The American Stock Exchange followed suit in 1973, introducing a similar measure for 800 listed companies.
A system of stock indices is built on a similar principle in all countries with a developed securities market. Thus, the Japanese analogue of the Dow Jones index is the Nikkei index (Nikkei), calculated on the shares of 225 largest companies, the index of the Tokyo Stock Exchange "Topik" (Topix); German - DAKS index (DAX) for 30 companies; in Singapore - the Straits Times index, in Hong Kong - the Hang Seng index, etc. Some newspapers and news agencies calculate their indexes using the Standard and Poor's method for registered companies. For example, in the UK, the index is calculated by the Reuters agency (Reuter) and the newspaper "Financial Times" (FT - SE Index), in Germany - "Frankfurter Albgemeine Zeitung" (FAZ - Index).

Stock quotes in Russia and abroad

Among the numerous reports characterizing the current situation on the securities market, information on stock exchange quotations is of greatest interest to investors. This is quite understandable, since, firstly, the share has been and remains one of the most common and popular types of securities among individual investors, and, secondly, it is within the framework of the exchange turnover that the securities of companies that determine the business face of any country circulate.
At first glance, stock reports frighten with their volume, abundance of numbers and abbreviations. However, reading them is not difficult. Most investors draw from them all the basic information about the state of the enterprises they are interested in and the situation on the securities market. Moreover, to understand these columns of numbers, one does not even need knowledge of foreign languages, since everywhere they are built according to a more or less uniform scheme.

"The exchange quotation of shares on the US stock exchanges is considered in the first edition of this textbook (Economics: Textbook / Edited by A.S. Bulatov. M., 1994. S. 384-386),

In the 90s. in Russia there were a number of stock indices, calculated, as a rule, by Russian information and brokerage companies (Table 24.2).

Table 24.2. The main indices of the Russian stock market used in the 90s.

At present, the official indicator of the state of the Russian securities market, which makes it possible to monitor the current situation on it, is the RTS-Interfax index.
The RTS-Interfax index (currency value) is calculated as the ratio of the current total market capitalization (value) of securities securities included in the list for index calculation to the total market capitalization (value) of securities at the base point in time according to the following formula:

where Iо is the initial value of the RTS-Interfax index at the base point in time (January 5, 1998); In — RTS-Interfax index (currency value) at the current time (n= 1,2,3, ...); K is a smoothing coefficient, which is introduced due to changes in the list of shares included in the index calculation (at the initial moment, K = 1); MktCapn — total market capitalization of securities from the listing for index calculation at the current moment of time; MktCap0 is the total market capitalization of the securities included in the list for index calculation at the base point in time.

The total market capitalization of Russian trading system (RTS) securities is defined as the product of the market price of shares of a given type at time n by the number of such shares:

where MktCapn is the total market capitalization of securities; Рni is the market price of the stock of the i-th type at the current moment of time; Q ni is the total number of shares of the i-th type issued at the current time; N is the number of shares in the list on which the index is calculated.
In table. Table 24.3 shows the indicators of the corporate securities market for specific dates.

Table 24.3. Selected Indicators of the Corporate Securities Boom Market G

The RTS-Interfax index (rouble value) is calculated on the basis of the currency value, taking into account changes in the current ruble exchange rate to the US dollar compared to the exchange rate on the initial date:

where Im is the RTS-Interfax index (ruble value); In — RTS-Interfax index (currency value); R is the exchange rate of the ruble against the US dollar on the day the index is calculated; Ro is the exchange rate of the ruble against the US dollar on the initial date of index calculation.

As noted above, the main volume of securities trading in Russia is currently accounted for by the over-the-counter market. This is largely due to the privatization scheme. The foundations of the OTC market were laid in 1993-1994. Trading systems, along with an increase in the volume of activity, seek to solve the problems of standardizing the terms of transactions, stock quotes, the obligatory fulfillment by brokers of the conditions specified in the application, liability for violation of trading rules, ensuring the re-registration of property rights, compliance with the terms of re-registration and payment, maintaining market liquidity, etc. Taking into account of all this, in December 1996, on the basis of the Russian Trading System (RTS), RTS-2 was opened for shares of the second echelon. The RTS focuses on the most liquid stocks. There are about 20 of them. RTS-2 serves about 1,500 more joint-stock companies, in particular, securities of regional enterprises of the energy complex, communications, metallurgy, etc. Thus, trading in less liquid and more liquid shares is divided.

Bond ratings

Almost all issued bonds are evaluated by one or more specialized rating agencies. The main goal is to determine the ability of the issuer to pay interest on time during the life of the bond and to repay it on time. In other words, it is necessary to determine the indicator of reliability. This is what commercial agencies do.
In the world, the rating systems of the two main rating agencies are most famous: Standard & Poor's Corporation and Moody's Investors Service.
Most of the time, their scores are the same.
The initiative to determine the rating of a security, as a rule, belongs to the issuer, who pays the agency a certain amount for assessing its creditworthiness.
If a bond has not been rated and has not been rated, it will not be purchased by individual investors, and institutional investors are legally prohibited from making such purchases.
All rating agencies use the letter system for designating the degree of p and c to a. The highest level of reliability is indicated by the letters AAA, the lowest - D (Table 24.4). "Halftones" are characterized by the signs "+" and "-".
The rating of the first four levels characterizes the so-called investment grade securities, the next group - speculative securities and the last, third, refers to completely insolvent issuers.

financial globalization

Active globalization is one of the features of the post-war development of the financial markets of the countries of the world. All of them function in ever closer connection with each other, turning into a single financial market. In other words, financial globalization is a higher stage of internationalization of the activities of financial markets in all its forms in order to meet the needs of the development of monetary and financial relations.
In many ways, this is manifested in the deep interaction of all the largest stock exchanges in the world. Fluctuations in the prices of shares and other financial assets on the exchanges of some countries are inevitably reflected through the exchange mechanism on the market conditions of other countries.
The almost complete abolition of restrictions on the movement of capital in the 70s. in developed countries has led to the fact that the securities market has become in the full sense of the word global. International securities appeared in circulation, primarily Eurobonds, which became the main object of transactions on the world stock market.
Eurobond is a long-term security issued on the Eurocurrency market by corporations, governments, international organizations in order to obtain funds to replenish working and fixed capital. Eurobonds are issued for various terms (from 7 to 40 years). Eurobonds are placed by investment and commercial banks. The main buyers are insurance, investment companies and pension funds.
The process of financial globalization has accelerated due to the further development and improvement of information systems. All-encompassing computerization, the creation of reliable and affordable telephone and other networks interconnected by space data transmission channels, allow the three largest stock exchanges in the world - New York, Tokyo and London - to constantly communicate with each other the current system satellite communications. The transfer of information is carried out continuously and is displayed on the exchange monitors. Two major agencies compete in the field of financial information transfer: the British Reuters (has 173,000 terminals scattered around the world) and the American Telerate (76,000 terminals). Telerate dominates the US market, Reuters dominates the rest of the planet.
Since 1996, the sale of shares has been introduced through the international telecommunications network. Each client with a personal computer can connect to the Internet system, which includes stock quotes of companies listed on the London Stock Exchange, and send orders to buy and sell certain securities.
The internationalization of world markets and the increase in the share of foreign securities in the portfolios of large investors necessitated the establishment of indices that reflect the general dynamics, with a single calculation base - the so-called global indices. Some of the most reputable and widely used indexes of this kind include the FT-SE Actuaries World Indexes and the investment bank Morgan Stanley Capital International. Calculations are carried out on 2212 shares of 24 countries of the world (FT-SE). These shares account for at least 70% of capitalization in each of these countries. The base of 100 is taken as of December 31, 1986. The index is calculated after the close of the New York Stock Exchange and is published the next day in the Financial Times.
Morgan Stanley indices include 3 international, 19 country and 38 international sectoral indices. Data are taken into account for 1,375 companies listed on stock exchanges in 19 countries, which account for 60% of the total capitalization in these countries.
Since January 1993, the Wall Street Journal has been publishing the Dow Jones World Index, calculated on the shares of 2,200 companies in 13 countries, broken down into 120 industry groups.
Changes in the financial markets, which accelerated throughout the 1990s, define the contours of the financial market in the 21st century.
The global financial market is increasingly taking on the shape of a two-tier system. The first - the upper, supranational, or global level is represented by the circulation of securities of leading transnational corporations. The second is the lower, national level. Securities of national companies are traded at this level. In the context of globalization, the boundaries between the two levels of the financial market are blurred.
How the model of the future global financial market is being formed can be seen from the ongoing changes in the stock market in Western Europe in connection with the introduction of a single European currency - the euro. Consolidation and integration of the national stock markets of these countries creates conditions for the formation of a common Western European financial space, within which securities of about 300 largest Western European enterprises will be traded. Along with the emerging pan-European financial market, national markets also retain their importance.

conclusions

1. The financial market (loan capital market) is a mechanism for the redistribution of financial resources between creditors and borrowers with the help of intermediaries based on the supply and demand of funds. In practice, this is a set of credit organizations (financial and credit institutions). The main function of this market is the transformation of idle funds into loan capital.
2. The loan capital market is divided into the money market and the capital market. The money market refers to the market for short-term credit transactions (up to one year). In turn, the money market is usually divided into accounting, interbank and foreign exchange markets, as well as the derivatives market. The capital market includes the securities market and the market for medium and long-term bank loans.
3. The financial market is also divided into the primary market (where financial resources are mobilized) and the secondary market (where these resources are redistributed), into national and international financial markets.
4. Securities traded on the financial market include fixed and non-fixed income securities, government, municipal and corporate securities. There are also mixed forms.
5. Stock securities are those securities that are admitted to trading on the stock exchange. The latter is a regularly functioning and organized one. In a certain way, a part of the securities market (shares, bonds, treasury notes, bills, certificates), where purchase and sale transactions are made with these securities through the mediation of members of the exchange.
6. Exchange members are individuals and legal entities. There is also an over-the-counter securities market, where firms are represented, whose sizes still “do not live up” to stock exchange standards. Operations in the securities market are divided into cash and urgent.
7. To assess the situation on the securities market, stock indices are calculated and tables of stock quotes of shares are compiled, ratings of bonds are carried out.
8. Financial globalization is a higher stage of internationalization of the activities of financial markets in all its forms in order to meet the needs of the development of monetary and financial relations.

Terms and concepts

Financial market (loan capital market)
Money market
capital market
discount market
Derivatives market
Interbank market
Currency market
Stocks and bods market
Stock
Fixed Income Securities
Disaggio
agio
Earnings per share (bond)
Dividend
Stock Exchange
stock values
Dealer
Broker
Cash transactions
Urgent operations
stock quote
Stock Indices
Bond ratings
Eurobond
financial globalization

Questions for self-examination

1. The components of which market are the securities market and the market for medium and long-term bank loans?
2. What is the difference between a bond and a stock?
3. Calculate what will be the annual income received on a bond for which annual interest payments of 8% are set, if at a nominal rate of 100 rubles. it is sold for 90 rubles.
4. Determine the income of the owner of the bond with a payment of 8% per annum on it after the established 10 years of its operation, if the bond is redeemed at a nominal rate of 100 rubles, and was purchased for 90 rubles.
5. Let's say that five years ago you purchased a bond at a par value of 100 rubles, issued for a period of 10 years. Annual interest payments on it are 4% (approximately the same was the interest paid by banks on deposits). Currently, most banks accept deposits at 10%. You decide to sell this bond. At what price and at what discount can it be sold in today's conditions?
6. Calculate how much income the owner of a share will receive if its nominal value is 250 rubles, the purchase price is 1000 rubles, and the dividend is 100 rubles.
7. The joint stock company issued 1,000 ordinary shares at a par value of 1,000 rubles. During the year of work, a profit of 2 thousand rubles was received, 50% of which was distributed as a dividend, and the other 50% went to expand production. Determine the book price of the stock.
8. Explain what securities and according to what criteria are admitted to the stock exchange.
9. Explain the differences between cash and term transactions in the Securities market. Why is urgent transactions on the stock exchange legally prohibited in a number of countries?
10. Describe the participants in urgent operations - "bulls" and "bears". What is the difference between their activities on the stock exchange?
11. What stock indices calculated in Russia do you know?