Chapter 2
Chapter 2
Chapter 2
2-2
THE MONEY MARKET
• Characteristics
• Maturity: Short-term (one year of less)
• Type: debt instrument
• Liquidity: more liquid
• Discount pricing: issued less than its face value
• Often have large denominations
COMMON MONEY MARKET
ASSETS
• Treasury bills
• Commercial paper
• Certificates of deposit
• Repurchase agreements
• Money Market Mutual Funds
TREASURY BILLS
• Maturity: a few days up to the maximum of 52 weeks, but common
maturities are one month, three months or six months.
• Issuer: Central Bank (on behalf of Department of the Treasury)
• Liquidity: highly liquid
• Discount pricing: issued less than its face value
• Default risk: Almost zero
• Denomination: $1000 - $5,000,000
• Purpose:
• To fund part of the government budget deficit
• To control money supply
COMMERCIAL PAPER
• Characteristics
• Maturity: Long-term (more than one year)
• Type: both debt and equity instrument
• Liquidity: not as liquid as money market instruments
• Discount pricing: available; selling at face value is available too
COMMON CAPITAL MARKET
ASSETS
• Treasury Bond
• Corporate Bond
• Common Stock
• Preferred Stock
TREASURY BOND
• Maturity: more than 10 years and up to 30 years
• Issuer: Central Bank (on behalf of Department of the Treasury)
• Liquidity: highly liquid
• Semi-annual interest payment
• Discount pricing: available
• Default risk: Almost zero
• Denomination: Minimum $1000
• Purpose: to meet govt. expenditure; to control money supply
CORPORATE BOND
• Maturity: 5 years of more
• Issuer: Corporation
• Liquidity: liquidity depends on the creditworthiness
• Collateral
• Mortgage
• Asset-backed security
• Securitization
• Pass-through security
COLLATERAL
2-27
STOCK MARKET INDEXES
DAILY PERFORMANCE OF THE
STOCK MARKET
STOCK DATA (ACI)
EPS AND P/E RATIO
EPS AND P/E RATIO
CRITERIA FOR PUBLIC
OFFER/LISTING IN DSE
• It has minimum existing paid up capital of Tk. 15 crore.
• It has been regular in holding annual general meeting (AGM).
• It has complied with the provisions of Corporate Governance
Guidelines.
• It has no accumulated retained loss at the time of application.
• The issuer or any of its directors is not a bank defaulter.
• It has positive net profit after tax and net operating cash flow at
least for the latest financial year
STOCK MARKET INDEX (DSE)
INDEX CALCULATION
(PRICE-WEIGHTED AVERAGE)
INDEX CALCULATION
(MARKET-VALUE-WEIGHTED INDEX)
INDEX CALCULATION
(MARKET-VALUE-WEIGHTED INDEX)
INDEX CALCULATION
(MARKET-VALUE-WEIGHTED INDEX)
DSE INDEX BASE