Measures of liquidity o The equity markets of the developed world tend to be much more liquid than emerging markets Liquidity refers to how quickly an asset can be sold without a major price concession So, while investments in emerging markets may be profitable, the focus should be on the long term Irwin/McGraw-Hill 8-<# Copyright o 2001 by The McGraw-Hill Commpanies, Inc. All rights
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Measures of Liquidity ⚫ The equity markets of the developed world tend to be much more liquid than emerging markets. ◼ Liquidity refers to how quickly an asset can be sold without a major price concession. ⚫ So, while investments in emerging markets may be profitable, the focus should be on the long term
Measures of market Concentration o Emerging markets tend to be much more concentrated than our markets Concentrated in relatively few companies That is, a few issues account for a much larger percentage of the overall market capitalization in emerging markets than in the equity markets of the developed world Irwin/McGraw-Hill Copyright o 2001 by The McGraw-Hill Commpanies, Inc. All rights
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Measures of Market Concentration ⚫ Emerging Markets tend to be much more concentrated than our markets. ◼ Concentrated in relatively few companies. ⚫ That is, a few issues account for a much larger percentage of the overall market capitalization in emerging markets than in the equity markets of the developed world
Market Structure Trading practices, and Costs ● Primary markets Shares offered for sale directly from the issuing compan ● Secondary markets Provide market participants with marketability and share valuation Irwin/McGraw-Hill Copyright o 2001 by The McGraw-Hill Commpanies, Inc. All rights
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Market Structure, Trading Practices, and Costs ⚫ Primary Markets ◼ Shares offered for sale directly from the issuing company. ⚫ Secondary Markets ◼ Provide market participants with marketability and share valuation
Market Structure Trading practices, and Costs ● Market Order an order to your broker to buy or sell share immediately at the market price ● Limit order An order to your broker to buy or sell at the at a price you want. when and if he can o If immediate execution is more important than the price, use a market order Irwin/McGraw-Hill 8-<# Copyright o 2001 by The McGraw-Hill Commpanies, Inc. All rights
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Market Structure, Trading Practices, and Costs ⚫ Market Order ◼ An order to your broker to buy or sell share immediately at the market price. ⚫ Limit Order ◼ An order to your broker to buy or sell at the at a price you want, when and if he can. ⚫ If immediate execution is more important than the price, use a market order
Market Structure Trading practices, and Costs Dealer market The stock is sold by dealers who stand ready to buy and sell the security for their own account In the u.s. the otc market is a dealer market ● Auction market Organized exchanges have specialists who match buy and sell orders. buy and sell orders may get matched without the specialist buying and selling as a dealer ● Automated Exchanges Computers match buy and sell orders Irwin/McGraw-Hill 8-<# Copyright o 2001 by The McGraw-Hill Commpanies, Inc. All rights
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Market Structure, Trading Practices, and Costs ⚫ Dealer Market ◼ The stock is sold by dealers, who stand ready to buy and sell the security for their own account. ◼ In the U.S., the OTC market is a dealer market. ⚫ Auction Market ◼ Organized exchanges have specialists who match buy and sell orders. Buy and sell orders may get matched without the specialist buying and selling as a dealer. ⚫ Automated Exchanges ◼ Computers match buy and sell orders