【正文】 ysis of any type of investment. The text will provide you with background in the organization of various securities markets。We provide an overview of the organization of security markets as well as the various players that participate in those markets. Together, these introductions should give you a feel for who the major participants are in the securities markets as well as the setting in which they act. The financial crisis that began playing out in 2007 and peaked in 2008 dramatically illustrates the connections between the financial system and the “real” side of the economy. We look at the origins of the crisis and the lessons that may be drawn about systemic risk. We close the chapter with an overview of the remainder of the text. Real Assets versus Financial Assetsp. 2The material wealth of a society is ultimately determined by the productive capacity of its economy, that is, the goods and services its members can create. This capacity is a function of theTable . Household wealth includes financial assets such as bank accounts, corporate stock, or bonds. However, these securities, which are financial assets of households, areFlow of Funds Accounts of the United States,Board of Governors of the Federal Reserve System, September 2009.Are the following assets real or financial?a.A college educatione.financialTable debt securitiesBonds。capital market if not, it will decrease. The performance of equity investments, therefore, is tied directly to the success of the firm and its real assets. For this reason, equity investments tend to be riskier than investments in debt securities. Equity markets and equity valuation are the topics of Part Five.derivative securitiesA security whose payoff depends on the value of other financial variables such as stock prices, interest rates, or exchange rates.s share price remains below a threshold or “exercise” price such as $20 a share, but it can be quite valuable if the stock price rises above that Derivatives have bee an integral part of the investment environment. One use of derivatives, perhaps the primary use, is to hedge risks or transfer them to other parties. This is done successfully every day, and the use of these securities for risk management is so monplace that the multitrilliondollar market in derivative assets is routinely taken for granted. Derivatives also can be used to take highly speculative positions, however. Every so often, one of these positions blows up, resulting in wellpublicized losses of hundreds of millions of dollars. While these losses attract considerable attention, they are in fact the exception to the more mon use of such securities as risk management tools. Derivatives will continue to play an important role in portfolio construction and the financial system. We will return to this topic later in the text.p. 5s expiration date. If the market price of Intel remains below $20 a share, the right to buy for $20 will turn out to be valueless. If the share price rises above $20 before the option expires, however, the option can be exercised to obtain the share for only $20. Financial Markets and the EconomyWe stated earlier that real assets determine the wealth of an economy, while financial assets merely represent claims on real assets. Nevertheless, financial assets and the markets in which they trade play several crucial roles in developed economies. Financial assets allow us to make the most of the economy39。to have the best prospects. Many smart, welltrained, and wellpaid professionals analyze the prospects of firms whose shares trade on the stock market. Stock prices reflect their collective judgment.Consumption TimingSome individuals in an economy are earning more than they currently wish to spend. Others, for example, retirees, spend more than they currently earn. How can you shift your purchasing power from highearnings periods to lowearnings periods of life? One way is to “store” your wealth in financial assets. In highearnings periods, you can invest your savings in financial assets such as stocks and bonds. In lowearnings periods, you can sell these assets to provide funds for your consumption needs. By so doing, you can “shift” your consumption over the course of your lifetime, thereby allocating your consumption to periods that provide the greatest satisfaction. Thus, financial markets allow individuals to separate decisions concerning current consumption from constraints that otherwise would be imposed by current earnings.Allocation of RiskVirtually all real assets involve some risk. When Ford builds its auto plants, for example, it cannot know for sure what cash flows those plants will generate. Financial markets and the diverse financial instruments traded in those markets allow investors with the greatest taste for risk to bear that risk, while other, less risktolerant individuals can, to a greater extent, stay on the sidelines. For example, if Ford raises the funds to build its auto plant by selling both stocks and bonds to the public, the more optimistic or risktolerant investors can buy shares of its stock, while the more conservative ones can buy its bonds. Because the bonds promise to provide a fixed payment, the stockholders bear most of the business risk but reap potentially higher rewards. Thus, capital markets allow the risk that is inherent to all investments to be borne by the investors most willing to bear that risk.p. 6s stock of real assets.Separation of Ownership and ManagementMany businesses are owned and managed by the same individual. This simple organization is well suited to small businesses and, in fact, was the most mon form of business organization before the Industrial Revolution. Today, however, with global markets and largescale production, the size and capital requirements of firms have skyrocketed. For example, in 2009 General Electric listed on its balance sheet about $73 billion of property, plan