Debt securities both markets (money & capital), depending on maturities of those securities.

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1 Money market by definition is shorten market. Debt securities both markets (money & capital), depending on maturities of those securities. What about primary market? What is it? It s the market, where equities and debt securities are sold. How does primary market differ from capital market? On primary market everything is sold for the first time. Public offer = free retention Can I say, that the Warsaw Stock Exchange has been floated? Is the stock exchange already listed? Yes, because the process of public offer is still going on. Floating is the first day of shares to be listed on the stock exchange proper. Secondary market is the stock exchange proper. We have to follow the business news Konopnicka will bring us newspapers, we ll have to read them and explain her, what s going on. Can I say that debt securities are those present on secondary market? Yes. Primary market: companies and investors Secondary market: only investors Strona 15, po przeczytaniu przeanalizować rysunek. Issuing house not only issues the shares, very often is underwriter, institution that guarantees that certain operation will take place, if the shares will not be bought, the remaining shares will be bought by this bank and the bank will enter the stock exchange as investor. The idea is that a company needs some funds and this money has to be guaranteed by the issuing house. The issuing house will definitely have any problem with selling shares, because all the shares will be bought. bank emisyjny. Invisible hand of the market the supply or demand. The supply side of the market is represented by investor, on demand side there are issuers. On the drawing, the issuing house represents the demand and it represents the company. Syndicated loan several institutions together guarantees funds for the company, the institutions share both risk and profit kredyt konsorcjalny.

2 Statements from page 17: 1. False, 2. False, 3. True, 4. False, 5. True, 6. False, 7. True (because stock exchange is the secondary market), 8. False (stock exchange is secondary market, on the secondary market are only investors savers, but if you extend the definition of stock exchange to the whole capital market, it will be True some sources defines the stock exchange only as primary, some sources defines it as a whole capital market), 9. True, 10. True? Zadanie 1.2.2: 1. To purchase a house 2. To meet day-to-day expenditures (positive cash flow pozostaje nam coś po zapłaceniu wszystkich opłat, jesteśmy na plusie, negative cash flow gdy firma nie ma gotówki I musi jeszcze pożyczać kasę, by sfinansować działalność), To buy plant and machinery, To finance the take-over 3. To pay for construcction works, To meet day-to-day expenditure On the stock exchange, who are savers? Capital market consists of primary and secondary market. So who are savers? The savings are supply of capital, so savers are suppliers the companies and the households. In other words, they are investors. And who are the borrowers? Those companies and households which need capital they represent the demand for money. In most cases, the borrowers will be the companies (not all companies, only capital companies) and government. [tu tłumaczymy sobie coś niecoś o spółkach ] Joint-stock company spółka akcyjna. Joint-stock partnership spółka komandytowo-akcyjna. PLC = public limited company spółka akcyjna w krajach anglosaskich, nie tłumaczymy jednak jak nasze S. A.! Możemy powiedzieć, że jest to odpowiednik S. A., ale dla polskiego rynku kapitałowego używamy terminu joint-stock comapny.

3 By buying shares you become the owner of the business with voting power. This power is determined by the value of your shares. Because you are the owner, you get the dividend. However, dividend is not guaranteed it is paid only if there is profit and only if the general meeting of the owners agrees. Nobody guarantees you that when buying shares, you ll get profit. Portfolio portfel akcji it has to be diversified. You have to have shares, bonds, etc., but you also have to balance them. Bounce debt securities. By definition, debt securities guarantee profit. (?) Bond puts an obligation on the issuer to buy it back. But if it is convertible bond, it can be converted into shares. Let s return to the first year T + S = I + G T, G government sector S, I private sector Taxes + savings should be balanced by injections by government + spends for investment The government collects taxes your PDI is lower taxes should be balanced by investments by the government. What you want to for the private sector is to bring the money back. Savings that are not needed are invested. Money held in bank, home, current account or low interest deposits this money is lost for the economy, because it doesn t guarantee any income. Page 13-14: Capital influate kapitał zamrożony Capital owned kapitał własny Circulating capital kapitał obrotowy Current assets rachunek bieżący Current liabilities Fixed assets aktywa trwałe

4 Liquid capital kapitał płynny Working capital kapitał pracujący Liquid assets, quick assets aktywa płynne, aktywa bieżące Share capital Bank balances środki na koncie Zadanie 1.1.1: 1 d 2 a 3 g 4 b 5 f 6 e 7 c Personal disposable income, PDI this part of our earnings which we want to save or spend. Money left after paying taxes and other costs of living. Personal savings Personal savings rate percentage of income we can save. (?) Investments fund fundusz inwestycyjny Unit trust, Mutual fund fundusz powierniczy Building society działają bardziej na zasadzie SKOK ów, choć niektóre building societies w Wielkiej Brytanii działają na zasadzie banków Pension fund fundusz emerytalny We can say that these institutions are savers. But do these institutions actually borrow? No, because they invest on our behalf. They are called institutional investors and they are usually given preference treatment by other companies.

5 Even if you invest short term, the interest rate will be very high. The more amount, the higher the interest rate is.