Financial Markets presentation by Farid Sattarov, Qrant Invest director. Qafqaz University, Aze

2. Short information about Qarant Invest
 Facts:
 1) was established on August, 2011;
 2) staff – 7 workers (3 CFA candidates);
 3) has brokerage license;
 4) offers trainings;
 5) offers brokerage services on foreign financial markets;
 6) on September, 2011 signed Memorandum with American Alumni
Association;
 7) on November, 2011 signed Memorandum with Qafqaz
University;
 8) already launched offline brokerage services;
 9) will launch Qarant FX online trading platform in January,
2012.
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3. Financial market – what’s that?
 Financial market is a mechanism that allows to
buy/sell financial instruments.
 Almost every person (and almost all types of
organizations) can become participant of the financial
market (domestic and foreign markets).
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4. Financial markets
Currency market Capital market Money market Derivative market
Equity market Short-term Futures market
FOREX debt obligation
Bond market Options market
market
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5. For what we need financial
markets?
 Financial markets give the next mentioned opportunities:
 1) opportunity of borrowing money from the market with
low interest rates through issue of debt obligations;
 2) opportunity of attraction money through initial public
offering (IPO);
 3) opportunity of risks lowering for existing financial
operations;
 4) opportunity of investing money in financial instruments
for getting future profit;
 5) etc.
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6. Participants of financial markets
List of participants:
1) banks;
2) investment funds;
3) pension funds;
4) insurance companies;
5) corporations;
6) brokerage companies;
7) individuals.
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7. What does financial instrument
mean?
 A financial instrument is a tradable Investor
asset of any kind, either; evidence of
an ownership interest in an entity;
or a contractual right to receive, or
deliver, cash or another financial Broker
instrument.
 Investors buy/sell financial
instruments through brokers.
Exchange
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8. History of trading methods
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9. Currency market
Currency market is very famous as a FOREX (foreign
exchange). Financial instruments available for trading
on this market are the currencies of different countries
(currency pairs).
The main financial instruments on the FOREX market
are:
1) EUR/USD
2) GBP/USD
3) USD/JPY
4) USD/CHF
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10. Main currency traders
Rank Name Market share
1 Deutsche Bank 15.64%
2 Barclays capital 10.75%
3 UBS AG 10.59%
4 Citi 8.88%
5 J.P.Morgan 6.43%
6 HSBC 6.26%
7 Royal Bank of Scotland 6.20%
8 Credit Suisse 4.80%
9 Goldman Sachs 4.13%
10 Morgan Stanley 3.64%
Other traders 22.68%
% of overall volume, May 2011
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11. Stock market
Basically stocks and bonds are traded on the equity
and bond markets accordingly.
Stock’s opportunities:
1) Voting right;
2) Opportunity of getting capital gain;
3) Stock represents a part of net assets of entity.
Bond’s opportunity:
1) Fixed income;
2) Privilege during bankruptcy.
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12. Stocks – short information
 Stock of a business entity represents the original
capital paid into or invested in the business by its
founders.
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13. Stocks – short information
 There are two main types of stocks: common and
preferred.
 Common stock:  Preferred stock:
 1) gives a voting right  1) does not give a voting right
 2) pays non-fixed dividends  2) pays fixed dividends
 3) can not be convertible  3) can be convertible
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14. Stocks – short information
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15. Stocks return examples
Company name January 2009 June 2011
Apple 85.88 335.67 +290.85%
Ford 2.30 13.79 +499.56%
J.P.Morgan 31.19 40.94 +31.26%
Caterpillar 44.91 105.15 +134.13%
McDonald’s 62.38 84.32 +35.17%
Figures in US dollars
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16. Resources for stock analysis
 There are some very interesting web-sites with
qualitative information about stocks.
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17. Bonds – short information
 In finance, a bond is a debt security, in which the
authorized issuer owes the holders a debt and,
depending on the terms of the bond, is obligated to
pay interest (the coupon) to use and/or to repay the
principal at a later date, termed maturity. A bond is a
formal contract to repay borrowed money with interest
at fixed intervals.
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18. Bonds – short information
Bonds
List of sub-types of bonds:
Fixed rate bonds
Floating rate bonds
Government bonds
Zero-coupon Corporate
Treasury bonds
Municipal bonds
etc.
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19. Bonds – short information
I want to invest 1000
USD in corporate
fixed rate bond We can offer You
5,00% 3-year bond
for 1000 USD
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20. Bonds – short information
Third year – 1000 + 50 USD (nominal and 5,00% of 1000 USD)
Second year – 50 USD (5,00% of 1000 USD)
First year – 50 USD (5,00% of 1000 USD)
1000 USD
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21. NYSE
 New-York Stock Exchange stock
Number of world’s largest
NYSE is thelistings --- 2317
exchange by in 1817. Currently
was founded market capitalization
(15,97 is located at 11
NYSE trillion dollars as of
December 2010)
Wall Street, New-York
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22. NASDAQ
 NASDAQ islistings --- 2872
Number of the world’s second
Stock Exchange
largest stock exchange by market
was founded in 1971
capitalization (4,93 trillion dollars
as of December 2010)
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23. Tokyo Stock Exchange
 Tokyo Stock Exchange2292 world’s
Number of listings --- is the
was foundedstock exchange by
third largest in 1878
market capitalization (3,82 trillion
dollars as of December 2010)
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24. LSE
 London Stock Exchange is the world’s
Number of listings --- 2966
fourth largest stock
was founded in 1801exchange by
market capitalization (3,61 trillion
dollars as of December 2010)
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25. Futures market
Types of futures contracts:
1) Futures for is a derivative financial instrument
Futures oil;
2) Futures for gas;
(contract) with future delivery.
3) Futures for currency;
4) Futures for interest rate; instruments of the
The main financial
5) Futures formarket are contract based on
futures wheat;
6) Futures for meat;
financial items and commodities.
7) Futures for gold;
8) Futures for silver;
9) Futures for stock indices;
10) etc.
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26. Futures – short information
 In finance, a futures contract is a standardized contract
between two parties to exchange a specified asset of
standardized quantity and quality for a price agreed today
with delivery occurring at a specified future date, the
delivery date.
 The contracts are traded on a futures exchange.
 In many cases, the underlying asset to a futures contract ,
may not be traditional commodities at all – that is, for
financial futures the underlying asset or item can be
currencies, securities or financial instruments and
intangible assets or referenced items such as stock indexes
and interest rates.
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27. Futures – short information
41 Sell
40
39
38
37
36
35 Buy
34
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28. Options – short information
 In finance, an option is a derivative financial instrument
that specifies a contract between two parties for a future
transaction on an asset at a reference price. The buyer of
the option gains the right, but not the obligation, to engage
in that transaction, while the seller incurs the
corresponding obligation to fulfill the transaction.
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29.  Thanks for Your attention