About Me
Chartered Financial Analyst (CFA)
1 Ethical and Professional Standards
1-1 Code of Ethics
1-2 Standards of Professional Conduct
1-3 Guidance for Standards I-VII
1-4 Introduction to the Global Investment Performance Standards (GIPS)
1-5 Application of the Code and Standards
2 Quantitative Methods
2-1 Time Value of Money
2-2 Discounted Cash Flow Applications
2-3 Statistical Concepts and Market Returns
2-4 Probability Concepts
2-5 Common Probability Distributions
2-6 Sampling and Estimation
2-7 Hypothesis Testing
2-8 Technical Analysis
3 Economics
3-1 Topics in Demand and Supply Analysis
3-2 The Firm and Market Structures
3-3 Aggregate Output, Prices, and Economic Growth
3-4 Understanding Business Cycles
3-5 Monetary and Fiscal Policy
3-6 International Trade and Capital Flows
3-7 Currency Exchange Rates
4 Financial Statement Analysis
4-1 Financial Reporting Mechanism
4-2 Income Statements, Balance Sheets, and Cash Flow Statements
4-3 Financial Reporting Standards
4-4 Analysis of Financial Statements
4-5 Inventories
4-6 Long-Lived Assets
4-7 Income Taxes
4-8 Non-Current (Long-term) Liabilities
4-9 Financial Reporting Quality
4-10 Financial Analysis Techniques
4-11 Evaluating Financial Reporting Quality
5 Corporate Finance
5-1 Capital Budgeting
5-2 Cost of Capital
5-3 Measures of Leverage
5-4 Dividends and Share Repurchases
5-5 Corporate Governance and ESG Considerations
6 Equity Investments
6-1 Market Organization and Structure
6-2 Security Market Indices
6-3 Overview of Equity Securities
6-4 Industry and Company Analysis
6-5 Equity Valuation: Concepts and Basic Tools
6-6 Equity Valuation: Applications and Processes
7 Fixed Income
7-1 Fixed-Income Securities: Defining Elements
7-2 Fixed-Income Markets: Issuance, Trading, and Funding
7-3 Introduction to the Valuation of Fixed-Income Securities
7-4 Understanding Yield Spreads
7-5 Fundamentals of Credit Analysis
8 Derivatives
8-1 Derivative Markets and Instruments
8-2 Pricing and Valuation of Forward Commitments
8-3 Valuation of Contingent Claims
9 Alternative Investments
9-1 Alternative Investments Overview
9-2 Risk Management Applications of Alternative Investments
9-3 Private Equity Investments
9-4 Real Estate Investments
9-5 Commodities
9-6 Infrastructure Investments
9-7 Hedge Funds
10 Portfolio Management and Wealth Planning
10-1 Portfolio Management: An Overview
10-2 Investment Policy Statement (IPS)
10-3 Asset Allocation
10-4 Basics of Portfolio Planning and Construction
10-5 Risk Management in the Portfolio Context
10-6 Monitoring and Rebalancing
10-7 Global Investment Performance Standards (GIPS)
10-8 Introduction to the Wealth Management Process
6.1 Market Organization and Structure Explained

6.1 Market Organization and Structure - 6.1 Market Organization and Structure Explained

Key Concepts

Primary Market

The Primary Market is where new securities are issued and sold to investors for the first time. This market is crucial for companies and governments to raise capital. Investors in the primary market directly buy securities from the issuer, often through an Initial Public Offering (IPO).

Example: A tech startup decides to go public and issues 1 million shares at $20 each. Investors buy these shares directly from the company, raising $20 million in capital for the startup.

Secondary Market

The Secondary Market is where existing securities are traded among investors. This market provides liquidity to investors, allowing them to buy and sell securities without affecting the issuer. The most common secondary markets are stock exchanges.

Example: After the tech startup's IPO, its shares are traded on the New York Stock Exchange (NYSE). Investors can buy and sell these shares among themselves, with the price fluctuating based on supply and demand.

Exchanges

Exchanges are organized markets where securities are traded. They provide a centralized location for buyers and sellers to meet and execute transactions. Exchanges ensure transparency, liquidity, and orderly trading. Examples include the NYSE, NASDAQ, and London Stock Exchange.

Example: The NASDAQ is an electronic exchange where thousands of companies list their shares. Traders and investors can place buy and sell orders through electronic systems, with prices updated in real-time.

Over-the-Counter (OTC) Markets

OTC Markets are decentralized markets where securities are traded directly between parties without the need for an exchange. These markets are often used for trading less liquid or smaller securities. The OTC Bulletin Board (OTCBB) and Pink Sheets are examples of OTC markets.

Example: A small biotech company with low trading volume might list its shares on the OTCBB. Investors can trade these shares directly with dealers, who act as intermediaries, without the need for a formal exchange.

Market Participants

Market Participants are the various entities involved in trading securities. These include retail investors, institutional investors, brokers, dealers, and market makers. Each participant plays a different role in the market, contributing to its efficiency and liquidity.

Example: Retail investors might include individual traders who buy and sell stocks for their personal portfolios. Institutional investors, such as mutual funds and pension funds, manage large portfolios and can influence market prices with their trades.

© 2024 Ahmed Baheeg Khorshid. All rights reserved.